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 
      

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Amitbhai and Narendrabhai are in Partnership sharing Profits and losses equally. from the following Trail balance and Adjustments given below, you are required to prepare Trading and Profit and Loss Account for the year ended 31st March, 2019 and Balance Sheet as on that date.

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