The insurance premium is paid for the year ending 1st September 2019 amounted to ₹ 1,500. Calculate prepaid insurance assuming that the year ending is 31st March 2019.

Question

The insurance premium is paid for the year ending 1^st September 2019 amounted to ₹ 1,500. Calculate prepaid insurance assuming that the year ending is 31^st March 2019.

Sum

Solution

We have to find the prepaid insurance amount for the 5 months period from 31^st Mar, 2019 to 1^st Sep, 2019.

An insurance premium paid for the 12 months = ₹ 1500

∴ Prepaid Insurance premium for the period of 5 months

= `1500 × 5/12` = ₹ 625

∴ Prepaid insurance for the year ending is 31^st March 2019 is ₹ 625.

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Partnership Final Accounts

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Q I. H. 3.Q I. H. 2.Q I. H. 4.

Chapter 1: Introduction to Partnership and Partnership Final Accounts - Exercise 1.1 (Objective Questions) [Page 54]

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Balbharati Book-Keeping and Accountancy [English] Standard 12 Maharashtra State Board

Chapter 1 Introduction to Partnership and Partnership Final Accounts
Exercise 1.1 (Objective Questions) | Q I. H. 3. | Page 54

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RELATED QUESTIONS

Write a short note on E-Commerce ?

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.

Darshan and Amar were partners sharing profit and losses in the proportion of 2: 1. Their balance sheet is as follows:

Balance sheet as on 31st March 2016

Liabilities	Amt(Rs)	Amt(Rs)	Assets	Amt(Rs)	Amt(Rs)
Capital A/cs:			Building		1,00,000
Darshan	96,000		Furniture		20,000
Amar	64,000	1,60,000	Equipments		10,000
General reserve		18,000	Debtors	63,000
Profit and Loss A/c		6,000	Less: R.D.D	3,000	60,000
Creditors		80,000	Stock		84,000
Pawans loan A/c		26,000	Cash		16,000
		2,90,000			2,90,000

On 1st April, 2016 Ranjit is admitted in the partnership on the following terms.

(1) Ranjit should bring in cash Rs 48,000 as capital for 1/5th share in future profits.
(2) Goodwill was raised in the books of the firm for Rs 18,000
(3) Building is revalued st RS 1,12,000 and tghe value of stock to be reduced by Rs 6,000
(4) Reserve for doubtful debts be maintained at Rs 1,800.
(5) Pawans loand is to be repaid.

Prepare:
(1) Revaluation A/c
(2) Capital A/cs of partners and
(3) 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 accounts that are prepared at the end of each accounting year.

State whether the following statement is True or False with reasons.

Balance Sheet is an Account.

State whether the following statement is True or False with reasons.

Depreciation is not calculated on Current Assets.

State whether the following statement is True or False with reasons.

Indirect expenses are debited to Trading Account.

State whether the following statement is True or False with reasons.

Net profit is a debit balance of Profit and Loss Account.

Find odd one

Find odd one.

Partners are _____ liable for the debts of the firm.

Trading Account is prepared on the basis of ______ expenses.

Answer in one sentence only.

What do you mean by pre-received income?

Answer in one sentence only.

As per which principle of accounting, closing stock is valued at cost price or at market price whichever is less?

Answer in one sentence only.

Why partners capital is treated as long-term liability of business?

Current account always shows a debit balance.

Do you agree/disagree with the following statement:

Amount borrowed by partner from his business will be debited to Current Account.

Do you agree/disagree with the following statement:

Carriage Inward is a selling and distribution overhead.

Do you agree/disagree with the following statement?

All direct expenditures are debited to profit and loss account.

Do you agree/disagree with the following statement:

Free distribution of goods is debited to the trading account.

Undervaluation of Closing Stock by 10%. Closing Stock was ₹30,000 find out the value of Closing Stock.

Amit bhai and Narendra bhai are in Partnership 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 2019 and Balance Sheet as on that date.

Trial Balance as on 31st March 2019

Debit Balance	Amount ₹	Credit Balance	Amount ₹
Plant & Machinery	2,80,000	Capital A/c:
Factory Building	75,000	Amitbhai	3,50,000
Sundry Debtors	28,700	Narendrabhai	3,00,000
Purchases	85,500	Sales	1,80,000
Bad Debts	500	Bills Payable	8,500
Sales Return	2,200	Discount	1,200
10% Govt. Bond (Purchased on 1^st Oct 2018)	40,000	Creditors	38,500
Import Duty	1,800	R.D.D.	2,700
Legal Charges	2,000	Bank Loan	15,000
Motive Power	12,000	Purchases Return	2,000
Warehouse Rent	1,800
Cash in Hand	20,000
Cash at Bank	70,000
Advertisement (for 2 years, w.e.f 1^st Jan 2019)	10,000
Salaries	3,800
Rent	1,500
Drawings :
Amitbhai	2,400
Narendrabhai	3,200
Furniture	1,95,800
Bills Receivable	20,700
Freehold Property	41,000
	8,97,900		8,97,900

Adjustments:

1) Stock on hand on 31^st March 2019 was valued at ₹ 43,000.

2) Uninsured goods worth ₹ 8,000 were stolen.

3) Create R.D.D at 2% on Sundry debtors.

4) Mr. Patil, our customer becomes insolvent and could not pay his debts of ₹ 500.

5) Outstanding Expenses - Rent ₹ 800 and Salaries ₹ 300

6) Depreciate Factory Building by ₹ 2,500 and Furniture by ₹ 1,800

From the following Trial Balance of M/S Meera and Madhav. 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^s^t March 2019

Debit Balance	Amount ₹	Credit Balance	Amount ₹
Stock (1/4/2018)	25,000	Bank overdraft	5,000
Debtors	80,500	Bills Payable	12,500
Bills Receivable	10,000	Creditors	68,000
Purchases	2,08,500	Sales	3,25,000
Returns	1,000	Outstanding Rent	2,000
Carriage Inward	3,000	Unpaid Wages	1,500
Carriage Outwards	4,500	Capital :
Motor Vehicle	55,000	Meera	75,000
General Expenses	1,800	Madhav	75,000
Export Duty	900	Purchase Return	1000
Advertisement	4,800
(For 3 years from 1/10/2018)
Printing & Stationery	1,200
Drawings :
Meera	3,500
Madhav	2,000
Leasehold Premises	1,10,000
Cash at Bank	45,000
Furniture	8,300
	5,65,000		5,65,000

Adjustments :

1) Closing Stock is valued at ₹32,000.

2) Provide Provision for Doubtful Debts ₹ 2,000.

3) Create reserve for Discount on Debtors @ 3%.

4) Valued of Leasehold Premises on 31st March 2019 ₹1,00,000.

5) Outstanding Expenses Printing & Stationary ₹500.

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^s^t 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:

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

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^s^t 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%.

Sun and Moon are Partners in Partnership Firm sharing Profits and Losses equally. You are required to give the effects of Adjustments with the help of the following information.

Trial Balance as on 31st March 2019

Debit Balance	Amount ₹	Credit Balance	Amount ₹
Land & Building	40,000	Capital A/C
Furniture	18,000	Sun	33,500
Machinery	40,000	Moon	33,500
(Purchased on 1/7/18)		Current A/c: Sun	6,000
Goodwill	2,000	Sundry Creditors	25,000
Wages	2,000	Bank Overdraft	10,000
Current A/c: Moon	4,000	Reserve Fund	5,000
8% Debentures	8,000	Providend Fund	5,000
(Purchased on 1/10/18)
Providend Fund Investment	3,500
Stock of Postal stamps	500
	1,18,000		1,18,000

Adjustments:

1) Partners are entitled to get salary ₹ 6,000 p.a. in addition to their profit & loss sharing.

2) Depreciation on Land & Building, Furniture & Machinery @10%, 5% and 3% respectively.

3) Interest on Capital 5% p.a.

4) Closing Stock ₹ 60,743.

5) Wages included ₹ 1,000 as advance is given to workers.

6) Interest due but not paid ₹ 800.

7) Total Net Profit amounted to ₹ 38,113.

Kshipra and Manisha are Partners sharing Profit and Loss in their Capital Ratio. You are required to prepare Trading Account and Profit and Loss Account for the year ended 31st March 2019 and Balance Sheet as on that date.

Trial Balance as on 31st March 2019
Debit Balance	Amount (₹)	Credit Balance	Amount (₹)
Sundry Debtors	28,000	Sales	1,20,000
Purchases	55,000	Rent	1,800
Furniture	38,500	Sundry Creditors	38,500
Plant & Machinery	60,000	Purchase Return	1,000
Wages	800	Discount	500
Salaries	3,500	Bills Payable	9,000
Discount	800	Capital A/c:
Bills Receivable	14,400	Kshipra	90,000
Carriage Outward	1,000	Manisha	30,000
Postage	500	Current A/c:
Sales Return	500	Kshipra	5,000
Cash in Hand	4,000	Manisha	3,000
Cash at Bank	47,000
Insurance	2,000
Opening Stock	17,800
Trade Expenses	1,500
Warehouse Rent	2,500
Advertisement	1,000
Building	20,000
	2,98,800		2,98,800

Adjustments:

Stock on 31st March 2019 was at ₹37,000.
Sales include the sale of machinery of ₹ 2,000, which is sold on 1st April 2018.
Depreciation on fixed assets @ 5%.
Each Partners is entitled to get Commission at 1% of Gross Profit and Interest on Capital 5% p.a.
Outstanding Expenses Wages ₹ 200 & Salaries ₹ 500.
Create provision for doubtful debts @ 3% on Sundry Debtors.

Find out Gross profit/Gross loss Purchases ₹ 30,000, Sales ₹ 15,000, Carriage Inward ₹ 2,400, Opening Stock ₹ 10,000, Purchase Returns ₹ 1,000, Closing Stock ₹ 36,000.

Borrowed loan from Bank of Maharashtra ₹ 2,00,000 on 1st October 2019 at a rate of 15% p.a. Calculate Interest on Bank Loan for the year 2019-20 assuming that the financial year ends on 31st March, every year.

Returns outward are deducted from ______.

Kranti & Sumangala are Partners sharing Profits and Losses in their Capital ratio. From the Trial Balance given below and Adjustments, you are required to prepare Trading and Profit and Loss Account for the year ended 31st March, 2019 and Balance Sheet as of that date.

Trial Balance as on 31st March, 2019
Debit Balance	Amount (₹)	Credit Balance	Amount (₹)
Stock (1/4/2018)	32,500	Capital:
Purchases	40,000	Kranti	1,20,000
Sundry Debtors	1,00,000	Sumangala	40,000
Bills Receivable	8,500	Sales	60,000
Wages	3,000	Sundry Creditors	30,000
Investment	32,000	Bills Payable	15,000
Postage	2,700	Commission	325
Insurance	7,500	Purchases Returns	1,000
Plant & Machinery	15,000
Salaries	4,850
Prepaid Rent	2,000
Bad-debts	500
Furniture	12,500
Cash in Hand	3,775
Sales Return	1,500
	2,66,325		2,66,325

Adjustments:

Closing Stock is valued at Cost Price ₹ 28,000 and Market Price ₹ 32,000.
Insurance is paid up to 30th June 2019.
Outstanding Expenses - Wages ₹ 800, Salaries ₹ 700.
Book value of Plant and Machinery is reduced to ₹ 13,000.
Depreciate Furniture by 5% p.a.
Provide further Bad debts of ₹ 800.
Goods of ₹ 3,000 distributed as a free sample.

From the following Trial Balance of Riddhi and Siddhi, you are required to prepare Trading and Profit & Loss Account for the year ended 31st March, 2020 and Balance Sheet as on that date after considering the additional information given below.

Trial Balance as on 31st March, 2020
Debit Balance	Debit (₹)	Credit (₹)
Stock (1/4/2018)	48,000
Capital - Riddhi		50,000
Siddhi		30,000
Purchases	22,500
Wages	800
Carriage Inward	1,000
Sundry Creditors		27,600
Bills Payable		20,000
Cash in hand	2,850
Insurance	1,200
Sundry Debtors	32,000
Bank Overdraft		18,000
Carriage outward	900
Land and Building	42,500
Furniture	38,700
Sales		47,000
Purchase Return		500
Sales Return	400
Rent		1,800
Bad-debts	300
R.D.D		350
Discount	700	1,000
Travelling Expenses	250
Advertisements	4,150
	1,96,250	1,96,250

Adjustments:

Closing stock ₹ 48,700.
Outstanding Expenses - Wages ₹ 700 and Travelling Expenses ₹ 200.
Depreciate Land and Building by 10% and Furniture by 5%.
Insurance Paid in Advance ₹ 300.
Goods of ₹ 3,000 destroyed by fire and Insurance Company rejected the claim fully.

From the following information, calculate Current Assets:

Debtors ₹ 60,000, Creditors ₹ 30,000, Bills payable ₹ 20,000, Stock ₹ 30,000, Loose tools ₹ 10,000, Bank overdraft ₹ 10,000.

State whether the following statement is True or False with reason:

Carriage Inward is carriage on purchases.

State whether the following statement is True or False with reason:

Profit and Loss Account is a Real Account.

To find out the Net Profit or Net Loss of the business ______ account is prepared.

Registration of Partnership is ______ in India.

Complete the following Table:

Creditors	Bills Payable	Third-Party Liabilities
16,000	12,000	?

Find the odd one:

Building, capital, reserve fund, bank loan

Royalty paid on production is shown in the ______.

Do you agree or disagree with the following statements:

Bills receivable is a current asset.

From the following Trial Balance and Adjustments given below of Rutul and Atul, you are required to prepare Trading and Profit and Loss Account for the year ended 31st March, 2023 and Balance Sheet as on that date.

Trial Balance as on 31st March, 2023
Debit Balances	Amount (₹)	Credit Balances	Amount (₹)
Purchases	71,000	Sales	1,16,400
Sundry Debtors	80,000	Sundry Creditors	51,400
Sales Returns	2,000	Purchase Returns	1,000
Opening Stock	36,200	R.D.D.	1,600
Bad Debts	1,000	Discount	100
Land & Building	50,000	Commission	500
Furniture	40,000	Capital A/cs:
Discount	2,000	Rutul	1,00,000
Royalties	1,400	Atul	60,000
Rent	3,800
Salaries	6,000
Wages	1,600
Insurance	3,000
Drawing:
Rutul	4,000
Atul	2,000
Cash at Bank	23,000
Cash in Hand	4,000
	3,31,000		3,31,000

Adjustments:

(1) Closing stock valued at ₹ 44,000.

(2) Write off ₹ 1,800 for bad and doubtful debts and create a provision for reserve for doubtful debts ₹ 2,000.

(3) Create a provision for discount on debtors @ 3% and on creditors @ 5%.

(4) Outstanding expenses: Wages ₹ 1,400 and Salaries ₹ 1,600.

(5) Insurance is paid for 15 months, w.e.f. 1st April, 2022.

(6) Depreciate Land and Building @ 5%.

(7) Rutul and Atul are sharing Profits and Losses in their Capital Ratio.

Find the odd one:

Find odd one.

Find odd one.

The insurance premium is paid for the year ending 1st September 2019 amounted to ₹ 1,500. Calculate prepaid insurance assuming that the year ending is 31st March 2019.

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