Sun and Moon are Partners in Partnership Firm sharing Profits and Losses equally. You are required to give effects of Adjustments with the help of following information
Trial Balance as on 31st March, 2019
Debit Balance | Amount | Credit Balance | Amount |
Land & Building | 40,000 | Capital A/c Sun | 33,500 |
Moon | 33,500 | ||
Furniture | 18,000 | Current A/c: Sun | 6,000 |
Machinery | 40,000 | Sundry Creditors | 25,000 |
(Purchased on 01/07/18) | Bank Overdraft | 10,000 | |
Goodwill | 2,000 | Reserve Fund | 5,000 |
Wages | 2,000 | Provident Fund | 5,000 |
Current A/c: Moon | 4,000 | ||
8% Debentures | 8,000 | ||
(Purchased on (01/10/18) | |||
Providend Fund Investment | 3,500 | ||
Stock of Postal stamps | 500 | ||
1,18,000 | 1,18,000 | ||
Adjustments:
1. Partners are entitled to get salary 6,000 p.a. in additional to their profit & loss sharing.
2. Depreciation on Land & Building, Furniture & Machinery @10%, 5% and 3% respectively.
3. Interest on Capital 5% p.a.
4. Closing stock 60,743
5. Wages included 1,000 as advance given to workers.
6. Interest due but not paid 800.
7. Total Net Profit amounted to 38,113.
Solution:
Final Account
In the books of Sun and Moon
Particulars | Amount | Amount | Particulars | Amount | Amount |
To Wages | 2,000 | ||||
(-) Prepaid wages | (1,000) | 1,000 | |||
By Closing Stock | 60,743 | ||||
To Gross Profit | 59,743 | ||||
60,743 | 60,743 | ||||
To Depreciation on | By Gross Profit | 59,743 | |||
Land & building | 4,000 | ||||
Furniture | 900 | ||||
Machinery | 900 | 5,800 | |||
To Interest on Capital | By Interest on Debentures | 320 | |||
Sun | 1,675 | ||||
Moon | 1,675 | 3,350 | |||
Outstanding Interest | 800 | ||||
To Partners Salary | |||||
Sun | 6,000 | ||||
Moon | 6,000 | 12,000 | |||
To Net Profit | |||||
Sun | 19,056 | ||||
Moon | 19,057 | 38,113 | |||
60,063 | 60,063 | ||||
Particulars | Sun | Moon | Particulars | Sun | Moon |
To Balance b/d | 4,000 | By Balance c/d | 6,000 | ||
By Interest on Capital | 1,675 | 1,675 | |||
By Salary | 6,000 | 6,000 | |||
To Balance b/d | 32,731 | 22,732 | By Net Profit | 19,056 | 19,057 |
32,731 | 26,732 | 32,731 | 26,732 | ||
Liabilities | Amount | Amount | Assets | Amount | Amount |
Capital A/c: | Land & Building | 40,000 | |||
(-) Depreciation | (4,000) | 36,000 | |||
Sun | 33,500 | Furniture | 18,000 | ||
(-) Depreciation | (900) | 17,100 | |||
Moon | 33,500 | 67,000 | Machinery | 40,000 | |
(-) Depreciation | (900) | 39,100 | |||
Goodwill | 2,000 | ||||
Current A/c | |||||
Sun | 32,731 | 8% Debentures | 8,000 | ||
(+) Interest | 320 | 8,320 | |||
Moon | 22,732 | 55,463 | Provident Fund Investment | 3,500 | |
Stock of Postal Stamp | 500 | ||||
Creditors | 25,000 | Closing Stock | 60,743 | ||
Bank Overdraft | 10,000 | Prepaid wages | 1,000 | ||
Reserve Fund | 5,00 | ||||
Provident Fund | 5,000 | ||||
Outstanding Interest | 800 | ||||
1,68,263 | 1,68,263 | ||||