Question

Abhijeet and Sujeet are partners sharing profits and losses in the ratio of `3/5` and `2/5`respectively. From the following trial balance and adjustments, prepare Trading, Profit and Loss Account for the year ended 31st March, 2010 and the Balance Sheet as on that date. 

Trial balance as on 31st march 2010
Debit Balance	Amount (Rs)	Credit Balance	Amount (Rs)
Drawing accounts:		Capital accounts:
Abhijeet	6,000	Abhijeet	1,32,000
Sujeet	4,000	Sujeet	88,000
Land and building	1,70,000	Sales	1,69,000
Plant (Addition on 1.1.2010, Rs 20,000)	90,000	Sundry creditors	81,900
Opening stock	44,000	Bank overdraft	80,000
Wages	13,500	Reserve for doubtful debts	2,000
Cash at bank	6,500	Outstanding expenses	4,600
Sundry debtors	69,200	Sundry income	4,000
Purchases	1,22,500	Pre-received rent	5,000
Carriage	2,100	10% Bank loan (Taken on 1st Oct., 2009)	32,000
Rent, rates and insurance	4,500
Furniture	50,000
Salaries	7,600
Bad debts	3,200
Office expenses	5,400
	5,98,500		5,98,500

 

Adjustments:

1. Closing stock was valued at cost Rs 34,000 and at market price Rs 40,000.
2. Depreciate plant @ 10% p. a.
3. Insurance was prepaid Rs 600.
4. Office expenses include personal expenses of Sujeet Rs 800.
5. Maintain R.D.D. at 5% on sundry debtors.

Answer 1

 Financial Statement of Abhijit and Sujit 

Trading Account 

for the year ended, March 31, 2010

Particulars		Amount (Rs)	Particulars	Amount (Rs)
Opening Stock		44,000	Sales	1,69,000
Purchases		1,22,500	Closing Stock	34,000
Wages		13,500
Carriage		2,100
Gross Profit (Balancing Figure)		20,900
		2,03,000		2,03,000

Profit and Loss Account 

for the year ended March 31, 2010

Particulars			Amount (Rs)	Particulars		Amount (Rs)
Depreciation on Plant			7,500	Gross Profit		20,900
Rent, Rate & Insurance		4,500		Sundry Incomes		4,000
Less: Prepaid		600	3,900	Net Loss (Balancing Figure)
Office Expenses		5,400		Abhijeet’s Capital A/c	2,976
Less: Personal Expenses (Sujeet)		800	4,600	Sujeet’s Capital A/c	1,984	4,960
Old Bad debts		3,200
Add: New Reserve		3,460
Less: Old Reserve		2,000	4,660
Outstanding Interest on Bank Loan			1,600
Salaries			7,600
			29,860			29,860

Balance sheet 

as on March 31, 2010

Liabilities		Amount (Rs)	Assets		Amount (Rs)
Capital:			Fixed Assets:
Abhijeet	1,32,000		Plant & Machinery	70,000
Less: Share of Net Loss	2,976		Add: Addition	20,000
Less: Drawings	6,000	1,23,024	Less: Depreciation	7,500	82,500
Sujeet	88,000		Land and Building		1,70,000
Less: Share of Loan	1,984		Furniture		50,000
Less: Drawings (4,000 + 800)	4,800	81,216
			Current Assets
10% Bank Loan	32,000		Closing Stock		34,000
Add: Outstanding Amount	1,600	33,600	Prepaid Insurance		600
Current Liabilities			Cash at Bank		6,500
Creditors		81,900	Sundry Debtors	69,200
Bank overdraft		80,000	Less: Reserve for Doubtful Debts	3,460	65,740
Outstanding Expenses		4,600
Pre Received Rent		5,000
		4,09,340			4,09,340

 

WN1 Calculation of Depreciation on Plant

\[\begin{array}{l}\text{Depreciation on Plant (Costing Rs} 70, 000) = 7, 00, 000 \times\frac{10}{100}= Rs 7, 000 \\ \text{Depreciation on Plant purchased as on Jan.} 01, 2010 = 20,000 \times\frac{10}{100}\times\frac{3}{12}= Rs\ 500 \\ \text{Total Depreciation charged on Plant} = 7,000 + 500 = Rs\ 7,500\end{array}\]

WN2 Calculation of Reserve for Doubtful Debts 

\[\text{Reserve for Doubtful Debt} = 69,200 \times\frac{5}{100}= Rs\ 3,460\]

WN3 Calculation of Interest on Bank Loan 

\[\text{Outstanding Interest on Bank Loan} = 32,000 \times\frac{10}{100} \times \frac{6}{12}= Rs\ 1,600\]

WN4 Distribution of Net Loss

\[\begin{array}{l}\text{Abhijeet} = 4,960 \times\frac{3}{5}= Rs\ 2, 976 \\ \text{Sujeet} = 4,960 \times\frac{2}{5}= Rs\ 1, 984\end{array}\]

Outstanding Interest on Bank Loan = 32,000 × 10100 × 612 = Rs 1,600" data-mathml_index="20">