Question

Mohini and Rohini are in partnership firm sharing profits and losses equally. From the following Trial Balance and adjustments given below, you are required to prepare Trading and Profit and Loss Account for the year ended 31st March, 2010 and Balance Sheet as on that date.

            Trial Balance as on 31^st March, 2010

Particulars	Debit Amount Rs.	Credit Amount Rs
Partner’s Capital A/c-
Mohini		120000
Rohini		90000
Purchases and Sales	220000	430000
Sundry Debtors and Creditors	45000	35000
Bills Receivable and Bills Payable	45000	50000
Discount	4000	3500
Opening stock	25000
Wages and Salaries	23000
Manufacturing Expenses	9,000
Factory Insurances	5,000
Factory Building	1,40,000
Plant and Machinery	75,000
Advertisement (for 2years w.e.f. 1st Jan. 2010)	10,000
Salaries and Wages	45,000
Warehouse rent	6,000
Import duty	11,500
Cash in hand	5,000
10% Government Bond (Purchased on 1st July 2009)	60000
	728500	728500

Adjustments:

1) Closing stock was valued at market price Rs 92,000 which is 15% above its cost price.

2) Goods costing Rs 3,000 purchased and received on 31st March, 2010 were not recorded in purchase book.

3) Depreciate Machinery at 10% p.a.

4) Outstanding Wages were Rs 2,500.

5) Goods of Rs 2,000 were taken by Mohini for personal use but no entry was made in the books of account.

6) Maintain R.D.D at 5% on Sundry Debtors.

Answer 1

Financial Statement of....
Trading Account  
for the year ended March 31,2010

Dr.                                                                                           Cr.

Particulars		Amount (Rs)	Particulars	Amount (Rs)
Opening Stock		25000	Sales	4,30,000
Purchases	2,20,000	232500	Closing Stock	80,000
Add : Additions	3000
Add : Import duty	11500
Less : Drawings by Mohini	(2000)
Factory Insurance		5000
Manufacturing Expenses		9000
Wages and Salaries	23000	25500
Add : Outstanding wages	2500
Gross Profit (Balancing Figure)		213000
		510000		510000

 

Profit and Loss Account

for the year ended March 31, 2010

Dr.                                                                                           Cr.

Particulars		Amount (Rs)	Particulars	Amount (Rs)
Discount		4000	Gross Profit	213000
Advertisement	10000	1250	Discount	3500
Less : Prepaid `(10000 xx 21/24 )`	(8750)		Accrued Interest on Government Bonds `(60000 xx 10/100 xx 9/2)`	4500
Salaries and Wages		45000
Warehouse Rent		6000
Depreciation on Machinery		7,500
Reserve on Doubtful Debts		2250
Net Profit (Balancing Figure)
Mohini	77500	155000
Rohini	77500
		221000		221000

 

Balance Sheet

                                 as on March 31, 2010

Liabilities		Amount (Rs)	Assets		Amount (Rs)
Capital			Fixed Assets
Mohini	195500	363000	Building		140000
Rohini	167500		Plant and Machinery	75000	67500
Current Liabilities			Less : 10% Depreciation	(7500)
Creditors	35000	38000	Current Assets
Add : Additions	3000		Closing Stock		80000
Bills Payable		50000	Debtors	45000	42750
Outstanding Wages		2500	Less :  Reserve for Doubtful Debts `(Rs. 45000 xx 5/100)`	2250
			Bills Receivable		45000
			Cash in Hand		5000
			10% Government Bond	60000	64500
			Add : Accrued Interest	4500
			Prepaid Advertisement		8750
		453500			453500

Working Notes:

Partners’ Capital Accounts

Dr.                                                                                        Cr.

Particulars	Mohini	Rohini	Particulars	Mohini	Rohini
Drawings	2000		Balance b/d	120000	90000
Balance c/d	195500	167500	Profit and Loss A/c -Profit	77500	77500
	197500	167500		197500	167500

Note : As per the textbook the Total of Balance sheet is Rs 4,48,500 but as per our solution it should be Rs 4,53,500.

*There is difference of Rs 10,000 in the Debit and Credit side of Trial Balance, therefore, Factory Building has been increased by Rs 10,000.