Question

Archana and Prerana are partners, sharing Profits and Losses in the ratio 2: 1 with the help of following Trial 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.

Trial Balance as on 31^st March 2019

Debit Balance	Amount ₹	Credit Balance	Amount ₹
Stock (1/4/2018)	8,560	Capital:
Patents	2,000	Archana	40,000
Sundry Debtors	18,500	Prerana	20,000
Stock of Stationary	3,000	Other Loans	3,000
Trade Mark	2,000	Reserve fund	1,000
Bills Receivable	6,300	Sundry Creditors	17,500
Electricity charges	1,450	Bills Payable	5,000
Wages	950	Purchase Return	1,000
Heating & Lighting	1,000	R.D.D	500
Trade Expenses	850	Sales	30,200
Sales Return	400	Interest	310
Land & Building	22,000
Furniture	13,000
Cash at Bank	5,000
Investments	7,500
Drawings :
Archana	1,200
Prerana	900
Bad debts	200
Purchases	23,700
	1,18,510		1,18,510

Adjustments:

1) Stock on 31^st March 2019 is valued at Cost Price ₹ 12,000 and Market Price ₹ 17,000.

2) Our customer Mr. Shekhar failed to pay his dues of ₹ 800.

3) 1/8^th of Patents are to be written off.

4) A part of Furniture ₹ 5,000 is purchased on 1^st Oct 2018.

5) Depreciation on Land & Building 10% and on Furniture 5%.

6) Outstanding Expenses Wages ₹ 300 and Electricity Charges ₹ 200.

7) Allow Interest on Capital 3%. 

Answer 1

Dr.	In the books of Archana and Prerna Trading and Profit and Loss Account for the year ended on 31st March 2019					Cr.
Particulars		Amount (Rs.)	Amount (Rs.)	Particulars	Amount (Rs.)	Amount (Rs.)
To Opening Stock			8,560	By Sales	30,200
To Purchases		23,700		Less: Sales Return	400	29,800
Less: Purchase Return		1,000	22,700	By Closing Stock		12,000
To Wages		950
Add: O/s Wages		300	1,250
To Heating & Lighting			1,000
To Gross Profit c/d			8,290
			41,800			41800
To Electricity Charges		1,450		By Gross Profit b/d		8,290
Add: O/s Electricity Charges		200	1,650	By Interest		310
To Trade Expenses			850
To R.B.D.D A/c
Bad debts		200
Add: New Bad debts		800
Less: Old Reserve		1,000	500
To Written off Patents		500	250
To Depreciation
Furniture		525
Land and Building		2,200	2,725
To Interest on Capital
Archana		1,200
Prerna		600	1,800
To Net Profit (Transferred to Capital A/c)
Archana		550
Prerna		275	825
			8600			8,600

 

Balance Sheet as on 31st March 2019
Liabilities	Amount ₹	Amount ₹	Assets	Amount ₹	Amount ₹
Capital Account: Archana			Patents	2,000
Opening Balance	40,000		Less: Written off	250	1,750
Add: Int. on Capital	1,200		Furniture	13,000
Add: Net Profit	550		Less: Depreciation (400  + 125)	525	12,475
	41,750		Land and Building	22,000
Less: Drawings	1,200	40,550	Less: Depreciation	2,200	19,800
Capital Accounts: Prerna			Stock of Stationery		3,000
Opening Balance	20,000		Closing Stock		12,000
Add: Int. on Capital	600		Sundry Debtors	18,500
Add: Net Profit	275		Less: Bad Debts (New)	800	17,700
	20,875		Trade Mark		2,000
Less: Drawings	900	19,975	Bills Receivable		6,300
Other Loans		3,000	Cash at Bank		5,000
Reserve Fund		1,000	Investments		7,500
Sundry Creditors		17,500
Bills Payable		5,000
Outstanding Expenses
Wages	300
Electricity Charges	200	500
		87,525			87,525

Working Notes:

(1) Stationery stock is an asset.

(2) Depreciation on furniture:

13,000
8,000 (Opening Balance) `= 8,000 xx 5/100` (Depr. for full year) = Rs. 400.	5,000 (Pur. on 01/10/18) `= 5,000 xx 6/12 xx 5/100`(Depr. for six months) = Rs. 125.

Total depreciation. = 400  +  125  +  ₹ 525

(3) `1/8  "patents to be written off" = 2,000 × 1/8` = ₹ 250.

(4) As no other expenses are given, Trade Expense is recorded in the Profit and Loss Account.