Nana and Nani are Partners in Partnership Firm sharing Profits and Losses equally. You are required to give effects of Adjustments in Profit & Loss A/c and Balance Sheet with the help of the following information. Trial Balance as on 31st March 2019 Debit Balance Amount ₹ Credit Balance Amount ₹ Insurance 15,000 Capital A/c Land and building 50,000 Nana 50,000 (Addition of 20,000 w.e.f 1st July 2018) Nani 50,000 Salaries 5,000 10% Bank loan taken on 1st Oct. 2018 30,000 Export Duty 2,500 Interest 1,500 Interest 1,000 Bills Payable 8,000 Furniture 40,000 Debtors 26,000 1,39,500 1,39,500 Adjustments : 1) Gross profit amounted to ₹ 34,500. 2) Insurance Paid for 15 months w.e.f. 1. 4. 2018. 3) Depreciate Land and Building at 10% p.a. and Furniture at 5% p.a. 4) Write off ₹ 1,000 for Bad Debts and maintain R.D.D at 5% on Sundry Debtors. 5) Closing Stock is valued at ₹ 34,500.

Dr. In the books of Nana and Nani Profit and Loss Account for the year ended on 31st March 2019 Cr. Particulars Amt ₹ Amt ₹ Particulars Amt ₹ Amt ₹ To Insurance 15,000 By Gross Profit b/d 34,500 Less: Prepaid Insurance 3,000 12,000 By Interest 1,500 To Depreciation: Land & Building 4,500 Furniture 2,000 6,500 To Salaries 5,000 To Export Duty 2,500 To Interest 1,000 To O/s Interest on Bank Loan 1,500 To R.B.D.D A/c - New Bad debts 1,000 Add: New Reserve 1,250 2,250 To Net Profit (Transferred to Capital A/c) Nana 2,625 Nani 2,625 5,250 36,000 36,000 Balance Sheet as on 31st March 2019 Liabilities Amt ₹ Amt ₹ Assets Amt ₹ Amt ₹ Capital Account: Nana 50,000 Land and Building 30,000 Opening Balance 2,625 52,625 Add: Purchased on 1/07/18 20,000 Capital Account: Nani 50,000 Opening Balance 50,000 Less: Depreciation 4,500 45,500 Add: Net Profit 2,625 52,625 Furniture 40,000 10% Bank Loan 30,000 Less: Depreciation 2,000 38,000 Add: O/s Interest on Bank Loan 1,500 31,500 Debtors 26,000 Bills Payable 8,000 Less: Bad Debts (New) 1,000 25,000 Less: R.D.D. (New) @ 5% 1,250 23,750 Closing Stock 34,500 Prepaid Insurance 3,000 1,44,750 1,44,750 Working Notes: (1) Here, the Profit and Loss Account and Balance Sheet are to be prepared. Therefore, the Trading Account is not prepared. Gross profit (given) is recorded on the Credit side of the Profit and Loss Account. (2) Land and Building: Land and Building 30,000 (Opening Balance)Depre. = `30,000 xx 10/100` = Rs. 3,000. 20,000 (Add on 1/7/2018)Depre. = `20,000 xx 10/100 xx 9/12` = Rs. 1500. Total Depreciation = 3000 + 1500 = ₹ 4,500 (3) Interest on 10 % bank loan is calculated for 6 months. (From 1/10/2018 to 31/3/2019) I = `"PRN"/100` = `30,000 × 10/100 × 6 /12` = ₹ 1,500. (4) Prepaid insurance = `3/15 xx "Insurance Amount"` = `3/15 xx 15,000` = ₹ 3,000 (5) RDD = 5% on (Debtors – New Bad debts) = `5/100` × (26,000 – 1,000) = `5/100` × 25,000 = ₹ 1,250.

Nana and Nani are Partners in Partnership Firm sharing Profits and Losses equally. You are required to give effects of Adjustments in Profit and Loss A/c and - Book Keeping and Accountancy

Question

Nana and Nani are Partners in Partnership Firm sharing Profits and Losses equally. You are required to give effects of Adjustments in Profit & Loss A/c and Balance Sheet with the help of the following information.

Trial Balance as on 31st March 2019

Debit Balance	Amount ₹	Credit Balance	Amount ₹
Insurance	15,000	Capital A/c
Land and building	50,000	Nana	50,000
(Addition of 20,000 w.e.f 1^st July 2018)		Nani	50,000
Salaries	5,000	10% Bank loan taken on 1^st Oct. 2018	30,000
Export Duty	2,500	Interest	1,500
Interest	1,000	Bills Payable	8,000
Furniture	40,000
Debtors	26,000
	1,39,500		1,39,500

Adjustments :

1) Gross profit amounted to ₹ 34,500.

2) Insurance Paid for 15 months w.e.f. 1. 4. 2018.

3) Depreciate Land and Building at 10% p.a. and Furniture at 5% p.a.

4) Write off ₹ 1,000 for Bad Debts and maintain R.D.D at 5% on Sundry Debtors.

5) Closing Stock is valued at ₹ 34,500.

Ledger

Solution

Dr.	In the books of Nana and Nani Profit and Loss Account for the year ended on 31^st March 2019						Cr.
Particulars		Amt ₹	Amt ₹	Particulars	Amt ₹	Amt ₹
To Insurance		15,000		By Gross Profit b/d		34,500
Less: Prepaid Insurance		3,000	12,000	By Interest		1,500
To Depreciation:
Land & Building		4,500
Furniture		2,000	6,500
To Salaries			5,000
To Export Duty			2,500
To Interest			1,000
To O/s Interest on Bank Loan			1,500
To R.B.D.D A/c		-
New Bad debts		1,000
Add: New Reserve		1,250	2,250
To Net Profit (Transferred to Capital A/c)
Nana		2,625
Nani		2,625	5,250

			36,000			36,000

Balance Sheet as on 31st March 2019
Liabilities	Amt ₹	Amt ₹	Assets	Amt ₹	Amt ₹
Capital Account: Nana	50,000		Land and Building	30,000
Opening Balance	2,625	52,625	Add: Purchased on 1/07/18	20,000
Capital Account: Nani				50,000
Opening Balance	50,000		Less: Depreciation	4,500	45,500
Add: Net Profit	2,625	52,625	Furniture	40,000
10% Bank Loan	30,000		Less: Depreciation	2,000	38,000
Add: O/s Interest on Bank Loan	1,500	31,500	Debtors	26,000
Bills Payable		8,000	Less: Bad Debts (New)	1,000
				25,000
			Less: R.D.D. (New) @ 5%	1,250	23,750
			Closing Stock		34,500
			Prepaid Insurance		3,000

		1,44,750			1,44,750

Working Notes:

(1) Here, the Profit and Loss Account and Balance Sheet are to be prepared. Therefore, the Trading Account is not prepared. Gross profit (given) is recorded on the Credit side of the Profit and Loss Account.

(2) Land and Building:

Land and Building
30,000 (Opening Balance) Depre. = `30,000 xx 10/100` = Rs. 3,000.	20,000 (Add on 1/7/2018) Depre. = `20,000 xx 10/100 xx 9/12` = Rs. 1500.

Total Depreciation = 3000 + 1500 = ₹ 4,500

(3) Interest on 10 % bank loan is calculated for 6 months. (From 1/10/2018 to 31/3/2019)

I = `"PRN"/100`
= `30,000 × 10/100 × 6 /12`
= ₹ 1,500.

(4) Prepaid insurance = `3/15 xx "Insurance Amount"`
= `3/15 xx 15,000`
= ₹ 3,000

(5) RDD = 5% on (Debtors – New Bad debts)
= `5/100` × (26,000 – 1,000)
= `5/100` × 25,000
= ₹ 1,250.

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Partnership Final Accounts

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Chapter 1: Introduction to Partnership and Partnership Final Accounts - Exercise 1.2 (Practical Problems) [Page 60]

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RELATED QUESTIONS

From the following Trading Balance of M/s Ajay and Vijay you are required to prepared Trading and Profit and Loss Account for the year ended 31st March, 2009 and Balance Sheet as on that date

Trial Balance as on 31st March , 2009

Particulars	Debit Amount Rs.	Credit Amount Rs.
Capital A/c's Ajay Vijay		60000 35000
Purchases and Sales	46,700	85,000
Sundry Debtors and Creditors	28000	25000
Bills Receivable and payable	5000	6000
Commission	4600	1800
Opening stock	18000
Wages	9900
Investment	13500
Postage and Telegrams	3600
Insurance	1200
Plant and Machinery	40700
Furniture	18000
Cash in hand	2500
Carriage	3200
Bad debts	400
Prepaid Rent	7000
Salaries	10500

Adjustments:

1) The closing stock is valued at Rs 31,000.

2) Outstanding expenses were wages Rs. 1,400, salaries Rs 800.

3) Depreciate Plant and Machinery by 10%.

4) Insurance at Rs 500 is paid in advance.

5) Provide for further bad debts of Rs 1,500.

6) Commission due but not received Rs 1,200.

Madhuri and Minakshi are in partnership sharing profits and losses in the ratio 3:2. 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, 2012 and Balance Sheet on that date.

Trial Balance as on 31st March, 2012
Debit Balance	Amount (₹)	Credit Balance	Amount (₹)
Building	4,00,000	Capital A/cs -
Plant and Machinery	1,20,000	Madhuri	3,00,000
Purchases	6,50,000	Minakshi	2,00,000
Carriage	7,000	Sales	8,10,000
Opening stock	90,000	Sundry Creditors	1,00,000
Wages	35,000	Outstanding salaries	4,200
Sundry Debtors	1,50,000	8% Bank loan (Taken on 1.10.2011)	1,00,000
Salaries	28,000
Postage and Telegram	4,000
Insurance	5,000
Bad debts	3,000
Rent	4,000
Discount	3,200
Drawing A/c-
Madhuri	10,000
Minakshi	5,000
	15,14,200		15,14,200

Adjustments:

Stock on hand on 31st March, 2010 was valued at Rs 1,10,000.
Depreciate Plant and Machinery at 10% p.a. and Building at 5% p.a.
Prepaid Insurance Rs 1,500.
Create R.D.D at 5% on Sundry Debtors.
Partners are allowed interest at 5% p.a. on their capitals.
Salaries include Rs 2,500 as advance to workers.

From the following Trial Balance of M/s Mahesh and Umesh, you are required to prepare Trading and Profit and Loss Account for the year ended 31st March, 2013 and Balance Sheet as on that date. Profit sharing ratio of Mahesh and Umesh was 3/5th and 2/5th respectively.

Trial Balance as on 31^st March, 2013
Debit Balance	Amount (₹)	Credit Balance	Amount (₹)
Investments	56,000	Capital A/c:
Carriage	7,000	Mahesh	1,62,000
Loose Tools	17,000	Umesh	1,08,000
Building	1,50,000	Current A/c:
Salary	13,000	Mahesh	16,200
Audit fees	8,500	Umesh	10,800
Opening stock	83,000	Sundry Creditors	99,000
Wages	7,500	Sales	4,20,000
Purchases	1,97,000	Bank Overdraft	56,400
Motive Power	15,000
Bad Debts	6,400
Printing and Stationery	4000
Debtors	96,000
Cash at Bank	52,000
Machinery	72,000
Motor Van	88,000
	8,72,400		8,72,400

Adjustments:

1) Stock on hand on 31st March, 2013 was valued at Rs 76,000.

2) Interest on partner’s capital at 5% p.a. was allowed.

3) Goods worth Rs 2,000 and Rs 1,500 withdrawn by Mahesh and Umesh respectively for their personal use.

4) Mahesh is entitled to get salary of Rs 6,500 and Umesh is to be given 20% commission on sales.

5) Rs. 2,500 due from customer is not recoverable.

6) Depreciate Motor Van at 8% p.a. and Building at 7% p.a.

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. 1^st 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.

From the following Trial Balance of M/s Sanjay and Vijay, you are required to prepare Trading and Profit and Loss Account for the year ended 31st March, 2013 and Balance Sheet as on that date after taking into consideration the adjustments given below.

Trial Balance as on 31^st March, 2013

Debit Balance	Amount Rs	Credit Balance	Amount Rs
Salaries and wages	12000	Sales	110000
Postage and Telegram	1,750	Sundry Creditors	72700
Opening Stock	23,500	Bills Payable	40000
Plant and Machinery	70,000	10% Bank loan (Taken on 1st Oct 2012)	60000
Advertisement	5,000	Outstanding Audit fees	5900
Import duty	2,100	Capital A/c-
Bad debts	1000	Sanjay	45000
Purchases	98500	Vijay	45000
Sundry Debtors	45800
Bills Receivable	16700
Carriage outward	1800
Wages and stationery (Note 2)	14000
Printing and stationery	4600
Cash in hand	1850
Leasehold Premises	80000
	378600		378600

Adjustments:
1) Closing stock was valued at Rs 30,000.

2) Postage stamps of Rs 250 and stationery of Rs 400 are unused.

3) Goods of Rs 2,500 distributed as free samples.

4) Leasehold property is to be run for 10 years w.e.f. 1st October, 2012.

5) Depreciate Plant and Machinery at 10% p.a.

6) Mr. Rajan, our customer become insolvent and could not pay his debts of Rs 1,500.

Keshav and Madhav were partners sharing the profits and losses in the ratio of 2:3. Their Balance Sheet is as follows:

Balance Sheet as on 31^st March, 2011

Liabilities	Amount (Rs)	Assets		Amount (Rs)
Capital Accounts :		Live stock		20000
Keshav	250000	Building		138000
Madhav	260000	Investment		45000
Creditors	8500	Loose Tools		38000
		Debtors	90000	72000
		(-)R.D.D	18000	72000
		Profit and Loss A/c		15000
		Closing Stock		104500
		Cash in Hand		86000
	518500			518500

On 1^st April, 2011 they admitted Uddhav on the following terms:

1) The new profit sharing ratio is equal.

2) Uddhav brings Rs 2,00,000 as his capital and Rs 80,000 as share of goodwill in cash.

3) Prepaid insurance of Rs 7,500 was not recorded in the books.

4) Loose tools were found undervalued by 5% and Building was found overvalued by 15% in the books.

5) All debtors are considered as good and out of creditors Rs 500 is no longer payable.

6) The market Value of Investment is 50% more than its book value.

Prepare, Profit and Loss Adjustment in A/c, Capital Accounts of partners and Balance Sheet of the new firm.

Dhiraj and Suraj are partners sharing profits and losses in the ratio of 2 : 1. From the following Trial Balance and adjustments, prepare Trading and Profit and Loss account for the year ended 31st March, 2013 and balance sheet as on that date :
Trial Balance as on 31.03.2013

Particulars	Amount Rs.	Particulars	Amount Rs.
Opening Stock	32,000	Sales	1,93,500
Purchases	64,000	Sundry Creditors	16,500
Plant and Machinery	30,000	Return Outward	2,500
Furniture	18,500	Capital Accounts
Carriage	1,500	Dhiraj	90,000
Wages	30,000	Suraj	50,000
Bills Receivable	5,000
Sundry Debtors	32,000
Conveyance	4,000
Salaries	10,500
Cash in hand	14,750
Land and Building	83,500
Bad debts	1,750
Patents	25,000
	352,500		352,500

Adjustments :

(1) Closing stock : Cost price RS. 25,000 and market price Rs. 30,000.

(2) An amount of Rs. 3,500 spent for repairs to building is debited to building account.

(3) Depreciate plant and machinery and building at 5% p.a.

(4) Included in wages in advance given to workers Rs. 3,000.

(5) Provide Rs. 1,500 for bad and doubtful debts on debtors.

Anita, Sunita and Kavita were partners sharing profits and losses in the ratio 3:3:2. Their Balance Sheet as on 31st March 2013 is as below:

Balance Sheet as on 31st March, 2013.
Liabilities	Amount (₹)	Assets	Amount (₹)
Capital Accounts	11,000	Building	10,000
Anita	15,000	Machinery	10,700
Sunita	8,000	Furniture	10,000
Kavita	10,000	Debtors	5,000
Creditors	10,900	Stock	6,600
Reserve fund	4,000	Cash	6,600

On 1st April, 2013, Mrs. Kavita retired from the firm on the following terms:

Goodwill of the firm is to be valued at ₹4,000, however, only Kavita’s share in it is to be raised in the books and written off immediately.
Assets to be revalued as under:
Stock ₹6,300; Machinery ₹10,000; Furniture ₹10,200.
R.D.D. to be maintained at 10% on debtors.
₹100 to be written off from creditors.
The amount payable to Mrs. Kavita is to be transferred to her loan account.

Prepare:

Profit and loss adjustment account.
Partner’s capital account, and
Balance Sheet of new firm as on 01.04.2013.

Write the word/phrase/term, which can substitute the following sentence.

The account to which all adjustments are made when capital is fixed.

Write the word/phrase/term, which can substitute the following sentence.

The accounts that are prepared at the end of each accounting year.

Write the word/phrase/term, which can substitute the following sentence.

An asset which can be converted into cash easily.

Write the word/phrase/term, which can substitute the following sentence.

The account in which selling expenses of the business are recorded.