Question

Sucheta and Gayatri are Partners sharing Profit and Loss in the ratio 3:2. From the following Trial Balance and additional information, you are required to prepare Trading and Profit and Loss Account for the year ended 31^st March 2019 and Balance Sheet as of that date.

Trial Balance as on 31^st March 2019

Particulars	Debit ₹	Credit ₹
Purchases and Sales	65,000	1,85,500
Works Manager's Salary	2,300
Capital:
- Sucheta		75,000
- Gayatri		40,000
Opening Stock	18,700
Debtors and Creditors	47,500	35,000
Wages and Salaries	4,000
Bills Receivable	22,000
Bills Payable		27,300
Discount		400
Motive Power	1,350
Custom duty	1,500
Interest		1,300
Unproductive Wages	3,000
Audit fees	2,500
Rent	1,800
Conveyance	2,000
Goodwill	25,000
Copyrights	20,000
Building	88,000
Partner (Sucheta's) Loan		6,150
Investments	40,000
Cash at Bank	26,000
	3,70,650	3,70,650

Adjustments:

1. Stock on 31st March 2019 was valued at ₹ 19,700.
2. Goods costing ₹ 3,000 distributed as a free sample.
3. Motive Power includes ₹ 500 paid for the deposit of the Power Meter.
4. Depreciate Building @ 5%.
5. Write of ₹ 2,000 for Bad debts and maintain R.D.D at 3% on Debtors.
6. Bills Receivable included dishonored of Bill of  ₹ 4,000.

Answer 1

In the books of Sucheta and Gayatri

Dr.	Trading A/c for the year ended on 31st March 2019						Cr.
Particulars		Amount ₹	Amount ₹	Particulars	Amount ₹	Amount ₹
To Opening Stock			18,700	By Sales		1,85,500
To Purchase			65,000	By Goods Distributed as Free sample		3,000
To Works Manager’s Salary			2,300	By Closing Stock		19,700
To Wages and Salaries			4,000
To Motive Power		1,350
Less: Deposit for Power Meter		500	850
To Custom Duty			1,500
To Gross Profit c/d			1,15,850
			2,08,200			2,08,200

 

Dr.	Profit and Loss Account for the year ended on 31st March 2019						Cr.
Particulars		Amount ₹	Amount ₹	Particulars	Amount ₹	Amount ₹
To Unproductive Wages			3,000	By Gross Profit b/d		1,15,850
To Audit Fees			2,500	By Discount		400
To Rent			1,800	By Interest		1,300
To Conveyance			2,000
To O/s Interest on Sucheta's Loan			369
To Advertisement Expenses (Goods distributed as samples)			3,000
To Depreciation on Building			4,400
To Bad debts		Nil
Add: New Bad debts		2000
Add: New R.D.D		1,485	3,485
To Net Profit (Transferred to Capital A/cs)
Sucheta		58,198
Gayatri		38,798	96,996
			1,17,550			1,17,550

 

Dr.	Capital Account for the year ended on 31st March 2019						Cr.
Particulars		Amount ₹	Amount ₹	Particulars	Amount ₹	Amount ₹
				By Balance b/d	75,000	40,000
To balance c/d		1,33,198	78,798	By Net Profit	58,198	38,798
		1,33,198	78,798		1,33,198	78,798

Balance Sheet as on 31^st March 2019

Liabilities	Amount ₹	Amount ₹	Assets	Amount ₹	Amount ₹
Capital A/c:			Deposit Power Meter		500
Sucheta	1,33,198		Building	88,000
Gayatri	78,798	2,11,996	Less: Depreciation	4,400	83,600
Sucheta’s Loan	6,150		Debtors	47,500
Add: O/s Interest on Sucheta's Loan	369	6,519
Creditors		35,000	Add: Dishonoured Bill	4,000
Bills Payable		27,300		51,500
			Less: New Bad Debts	2,000
				49,500
			Less: New R.D.D.	1,485	48,015
			Bills Receivable	22,000
			Less: Dishonoured Bill	4,000	18,000
			Goodwill		25,000
			Copy Rights		20,000
			Investments		40,000
			Closing Stock		19,700
			Cash at Bank		26,000
		2,80,815			2,80,815

Working Notes:

1. Add dishonored bill amount to debtors amount and then calculate B.D. and R.D.D.
2. Subtract dishonoured bill amount from bills receivable amount.
3.  Rate of interest on the partner’s loan is not mentioned; therefore, interest on the loan is calculated at 6% p.a.
   ∴ Interest on Sucheta’s Loan = `6,150 xx 1 xx 6/100` = ₹ 369