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 

Trading A/c And Profit & Loss A/c for the year ended 31st march, 2019

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

 

 
 

Partner`s Current Account

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

 

Balance Sheet as on 31st March, 2019

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