Ashok and Sangmesh are in partnership sharing profit and losses in the ratio of 2 : 1. From the following trial balance and adjustments given below, you are required to prepare Trading and Profit and Loss Account for the year ended on 31st March 2016 and Balance sheet as on that date: Trial Balance as on 31st March 2016 Particulars Debit Amount (₹) Credit Amount (₹) Prepaid insurance 3,200 Insurance 8,000 R.D.D. 4,000 Discount 3,200 Postage and telephone 12,800 Debtors and creditors 2,64,000 2,72,000 Salaries 2,24,000 Wages 96,000 Opening stock 1,92,000 Carriage 4,000 Purchased and sales 7,72,800 12,06,400 Return inward/Outward 22,400 36,800 Bank Overdraft 4,83,200 Plant and Machinery 96,000 Land and Building 7,04,000 Partner's Capital accounts: Ashok 2,08,000 Sangmesh 1,92,000 24,02,400 24,02,400 Adjustment: Write off Rs. 8,000 for bad debts and provide R.D.D. @ 5% on debtors. Goods worth Rs. 16,000 were distributed as free samples. Closing stock on 31st March 2016 was valued at the cost of Rs. 2,24,000 while its market price was Rs. 2,40,000. The salaries were outstanding at Rs. 8,000. Depreciation: Land and Building @ 5% p.a. and Plant and Machinery @ 10 % p.a.

In the books of Ashok and Sangmesh Dr. Trading A/c for the year ended 31.03.16 Cr. Particulars Amount (₹) Particulars Amount (₹) To Opening Stock 1,92,000 By Net Sales 11,84,000 To Net Purchases 7,36,000 By Closing Stock 2,24,000 To wages 96,000 By Goods distributed as free samples 16,000 To Carriage 4,000 To Gross Profit c/d 3,96,000 14,24,000 14,24,000 Dr. Profit & Loss Account for the year ended 31-03-2016 Cr. Particulars Amount (₹) Particulars Amount (₹) Amount (₹) To Discount 3,200 Gross Profit b/d 3,96,000 To Postage & Telephone 12,800 To Salaries (2,24,000 + O/S 8,000) 2,32,000 To Insurance 8,000 To Advertisement 16,000 To Bad Debts & RDD Adjustment 16,800 To Depreciation: Land & Building 35,200 Plant & Machinery 9,600 To Net Profit transferred to Partners’ Capital A/c 62,400 3,96,000 3,96,000 Net Profit = ₹ 62,400, to be shared 2:1 Ashok: ₹ 62,400 × `2/3` = ₹ 41,600 Sangmesh: ₹ 62,400 × `1/3` = ₹ 20,800 Balance Sheet as at 31-03-2016 Liabilities Amount (₹) Amount (₹) Assets Amount (₹) Amount (₹) Partners’ Capital Accounts 4,62,400 Land & Building (7,04,000 – 35,200) 6,68,800 Ashok 2,49,600 Plant & Machinery (96,000 – 9,600) 86,400 Sangmesh 2,12,800 Closing Stock 2,24,000 Sundry Creditors 2,72,000 Debtors 2,43,200 Bank Overdraft 4,83,200 Prepaid Insurance 3,200 Outstanding Salaries 8,000 12,25,600 12,25,600 Working Notes: Net Sales & Net Purchases Net Sales = Sales – Returns Inward = 12,06,400 – 22,400 = ₹ 11,84,000 Net Purchases = Purchases – Returns Outward – Free Samples = 7,72,800 – 36,800 – 16,000 = ₹ 7,20,000 Provision for Doubtful Debts Debtors after write-off = 2,64,000 – 8,000 = ₹ 2,56,000 New R.D.D. = 5% of 2,56,000 = ₹ 12,800 P&L charge = Bad Debts ₹ 8,000 + (New RDD ₹ 12,800 – Old RDD ₹ 4,000) = ₹ 16,800 Depreciation Land & Building @ 5% = 5% of 7,04,000 = ₹ 35,200 Plant & Machinery @ 10% = 10% of 96,000 = ₹ 9,600

Ashok and Sangmesh Are in Partnership Sharing Profit and Losses in the Ratio of 2 : 1. from the Following Trial Balance and Adjustments Given Below, You Are Required to Prepare Trading and Profit and

Question

Ashok and Sangmesh are in partnership sharing profit and losses in the ratio of 2 : 1. From the following trial balance and adjustments given below, you are required to prepare Trading and Profit and Loss Account for the year ended on 31st March 2016 and Balance sheet as on that date:

Trial Balance as on 31st March 2016
Particulars	Debit Amount (₹)	Credit Amount (₹)
Prepaid insurance	3,200
Insurance	8,000
R.D.D.		4,000
Discount	3,200
Postage and telephone	12,800
Debtors and creditors	2,64,000	2,72,000
Salaries	2,24,000
Wages	96,000
Opening stock	1,92,000
Carriage	4,000
Purchased and sales	7,72,800	12,06,400
Return inward/Outward	22,400	36,800
Bank Overdraft		4,83,200
Plant and Machinery	96,000
Land and Building	7,04,000
Partner's Capital accounts:
Ashok		2,08,000
Sangmesh		1,92,000
	24,02,400	24,02,400

Adjustment:

Write off Rs. 8,000 for bad debts and provide R.D.D. @ 5% on debtors.
Goods worth Rs. 16,000 were distributed as free samples.
Closing stock on 31st March 2016 was valued at the cost of Rs. 2,24,000 while its market price was Rs. 2,40,000.
The salaries were outstanding at Rs. 8,000.
Depreciation: Land and Building @ 5% p.a. and Plant and Machinery @ 10 % p.a.

Ledger

Solution

In the books of Ashok and Sangmesh
Dr.	Trading A/c for the year ended 31.03.16		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Opening Stock	1,92,000	By Net Sales	11,84,000
To Net Purchases	7,36,000	By Closing Stock	2,24,000
To wages	96,000	By Goods distributed as free samples	16,000
To Carriage	4,000
To Gross Profit c/d	3,96,000
	14,24,000		14,24,000

Dr.	Profit & Loss Account for the year ended 31-03-2016			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Discount	3,200	Gross Profit b/d		3,96,000
To Postage & Telephone	12,800
To Salaries (2,24,000 + O/S 8,000)	2,32,000
To Insurance	8,000
To Advertisement	16,000
To Bad Debts & RDD Adjustment	16,800
To Depreciation:
Land & Building	35,200
Plant & Machinery	9,600
To Net Profit transferred to Partners’ Capital A/c	62,400
	3,96,000			3,96,000

Net Profit = ₹ 62,400, to be shared 2:1

Ashok: ₹ 62,400 × `2/3` = ₹ 41,600

Sangmesh: ₹ 62,400 × `1/3` = ₹ 20,800

Balance Sheet as at 31-03-2016
Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Partners’ Capital Accounts		4,62,400	Land & Building (7,04,000 – 35,200)		6,68,800
Ashok	2,49,600		Plant & Machinery (96,000 – 9,600)		86,400
Sangmesh	2,12,800		Closing Stock		2,24,000
Sundry Creditors		2,72,000	Debtors		2,43,200
Bank Overdraft		4,83,200	Prepaid Insurance		3,200
Outstanding Salaries		8,000
		12,25,600			12,25,600

Working Notes:

Net Sales & Net Purchases

Net Sales = Sales – Returns Inward

= 12,06,400 – 22,400 = ₹ 11,84,000

Net Purchases = Purchases – Returns Outward – Free Samples

= 7,72,800 – 36,800 – 16,000 = ₹ 7,20,000

Provision for Doubtful Debts

Debtors after write-off = 2,64,000 – 8,000 = ₹ 2,56,000

New R.D.D. = 5% of 2,56,000 = ₹ 12,800

P&L charge = Bad Debts ₹ 8,000 + (New RDD ₹ 12,800 – Old RDD ₹ 4,000) = ₹ 16,800

Depreciation

Land & Building @ 5% = 5% of 7,04,000 = ₹ 35,200

Plant & Machinery @ 10% = 10% of 96,000 = ₹ 9,600

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Trial Balance as on 31^st March, 2012

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Trial Balance as on 31^st March, 2010

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Trial Balance as on 31^st March, 2013
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