Amitbhai and Narendrabhai Are in Partnership: Complete Accounting Solution for Trading and Profit & Loss Account and Balance Sheet

Introduction:

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.


"In this updated guide, we provide a comprehensive accounting solution for Amitbhai and Narendrabhai's are in partnership. This includes detailed steps for preparing the Trading and Profit & Loss Account and Balance Sheet as of 31st March 2019. Recent updates include additional examples, enhanced explanations, and a clearer breakdown of complex concepts to help accounting students better understand the process." 

 Trail Balance as on 31st March 2019:  

Debit Balance 

Amount ₹ 

Credit Balance 

Amount ₹ 

Plant & Machinery 

2,80,000 

Capital A/c: Amitbhai 

3,50,000 

Factory Building 

75,000 

Capital A/c: Narendrabhai 

3,00,000 

Sundry Debtors 

28,700 

Sales 

1,80,000 

Purchases 

85,500 

Bills Payable 

8,500 

Bad Debts 

500 

Discount 

1,200 

Sales return 

2,200 

Creditors 

38,500 

10% Govt. Bond 

40,000 

R.D.D. 

2,700 

(Purchased on 1st Oct 2018) 

 

Bank Loan 

15,000 

Import Duty 

1,800 

 

 

Legal Charges 

2,000 

 

 

Motive Power 

12,000 

 

 

Warehouse rent 

1,800 

 

 

Cash in Hand 

20,000 

 

 

Cash at Bank 

70,000 

 

 

Advertisement 

10,000 

 

 

(For 2-year, w.e.f 1st Jan 2019) 

 

 

 

Salaries 

3,800 

 

 

Rent 

1,500 

 

 

Drawings: Amitbhai 

2,400 

 

 

Drawings: Narendrabhai 

3,200 

 

 

Furniture 

1,95,800 

 

 

Bills Receivable 

20,700 

 

 

Freehold Property 

41,000 

 

 

Total 

8,97,900 

Total 

8,97,900 

Adjustments: 

1. Stock on hand on 31st March 2019 was valued at ₹43,000. 

   - Effect: Show in Balance Sheet on Assets side and in Trading A/c on credit side. 

  

2. Uninsured goods worth ₹8,000 were stolen. 

   - Effect: Show as a loss in Profit & Loss A/c on debit side and in Trading A/c on credit side. 

  

3. Create R.D.D. at 2% on Sundry Debtors. 

   - Effect: Show in Profit & Loss A/c on debit side and deduct from Sundry Debtors in Balance Sheet. 

  

4. Mr. Patil, Our Customer, became insolvent and could not pay his debts of ₹500. 

   - Effect: Add to Bad Debts in Profit & Loss A/c and deduct from Sundry Debtors in Balance Sheet. 

  

5. Outstanding Expenses - Rent ₹800 and Salaries ₹300. 

   - Effect: Add to the respective expense in Profit & Loss A/c and show as liability in Balance Sheet. 

  

6. Depreciation Factory Building by ₹2,500 and Furniture by ₹1,800. 

   - Effect: Show depreciation in Profit & Loss A/c on debit side and deduct from the respective asset in Balance Sheet. 

Final Account: In the Books of Amitbhai and Narendrabhai   

Trading A/c And Profit & Loss A/c for the year ended 31st March 2019:

Particulars  

Amount ₹  

Amount ₹  

Particulars 

Amount ₹ 

Amount ₹ 

To Purchase  

85,500  

  

By Sales  

1,80,000  

  

(-) Purchase Return  

2,000  

83,500  

(-) Sales Return  

2,200  

1,77,800  

To Import Duty  

1,800  

  

By Goods were stolen  

  

8,000  

To Motive Power  

12,000  

  

By Closing Stock  

  

43,000  

To Gross Profit c/d  

  

1,31,500  

  

  

  

Total  

2,27,800  

  

Total  

2,27,800  

  

To Bad Debt (T)  

500  

  

By Gross Profit b/d  

  

1,31,500  

(+) Bad Debt (A)  

500  

  

  

  

  

(+) R.D.D. (A)  

564  

  

  

  

  

  

1,564  

  


(-) R.D.D. (T)  

2,700  

-1,136  

  

  

  

To Legal Charges  

  

2,000  

By R.D.D.  

  

1,136  

To Warehouse rent  

  

1,800  

By Interest receivable  

  

2,000  

To Advertisement  

10,000  

  

By Discount  

  

1,200  

(-) Prepaid Advertisement  

8,750  

1,250  

  

  

  

To Salaries  

3,800  

  

  

  

  

(+) Outstanding Exp  

300  

4,100  

  

  

  

To Rent  

1,500  

  

  

  

  

(+) Outstanding Exp  

800  

2,300  

  

  

  

To Depreciation:  

  

  

  

  

  

Factory Building  

2,500  

  

  

  

  

Furniture  

1,800  

4,300  

  

  

  

To loss on goods were stolen  

  

8,000  

  

  

  

To Net Profit:  

  

  

  

  

  

Amitbhai  

56,043  

  

  

  

  

Narendrabhai  

56,043  

1,12,086  

  

  

  

Total  

1,35,836  

  

Total  

  

1,35,836 

Balance Sheet as on 31st March 2019:

Liabilities 

Amount ₹ 

Amount ₹ 

Assets 

Amount ₹ 

Amount ₹ 

Capital A/c: 

 

 

Plant & Machinery 

 

2,80,000 

Amitbhai 

3,50,000 

 

Factory Building 

75,000 

 

Narendrabhai 

3,00,000 

6,50,000 

(-) Depreciation 

2,500 

72,500 

(-) Drawings: 

Amitbhai 2,400

Narendrabhai 3,200 

 

 

10% Govt. Bond (Purchased on 1st Oct 2018)

40,000 

 

 

 

 (+) Interest Receivable

 2,000

 42,000

5,600 

 

 

 

 

 

 

Bills Receivable 

 

20,700 

 

6,44,400 

 

Cash in Hand 

 

20,000 

(+) Net Profit 

1,12,086 

5,32,314 

Cash at Bank 

 

70,000 

 

 

 

Furniture 

1,95,800 

 

Bills Payable 

 

8,500 

(-) Depreciation 

 1,800

1,94,000 

Creditors 

 

38,500 

Freehold Property 

 

41,000 

Bank Loan 

 

15,000 

Debtors 

 28,700

 

Outstanding: 

Rent 

Salaries 

 

 

(-) Bad Debt (A)

 

 500

28,200

 

800 

 

(-) R.D.D. @2% (A) 

 564

27,636

300 

1,100 

Prepaid Advertisement 

 

8,750 

 

 

 

Closing Stock