Question

X and Y are partners sharing profits in the ratio of 2 : 1. The undermentioned trial balance was extracted from their books as at 31st March, 2024:

Particulars	Dr. Balances (₹)	Cr. Balances (₹)
X’s Capital		3,20,000
Y’s Capital		2,40,000
X’s Drawings	40,000
Y’s Drawings	32,000
Stock (1st April, 2023)	45,200
Purchases and Sales	8,68,000	12,45,000
Debtors and Creditors	1,52,000	48,000
Buildings	6,00,000
Cash in Hand	5,900
Bank Overdraft		27,500
Salaries to Staff	74,700
Rent	26,400
Advertising Expenditure	5,000
Travelling Expenses	31,300
	18,80,500	18,80,500

You are required to prepare a Trading Profit and Loss Account and Profit and Loss Appropriation Account for the year ended 31st March, 2024, and a Balance Sheet as on that date. The following adjustments are to be made:

1. The value of the stock on March 31, 2024, was ₹ 64,000.
2. Charge depreciation on Buildings at 10%.
3. Provide for outstanding rent of ₹ 2,400.
4. Partners are entitled to interest on Capital @ 5% and X is entitled to a salary of ₹ 48,000 p.a.

Answer 1

Dr.	Trading Profit and Loss Account for the year ended 31st March, 2024				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Opening Stock		45,200	By Sales		12,45,000
To Purchases		8,68,000	By Closing Stock		64,000
To Gross Profit c/d		3,95,800
		13,09,000			13,09,000
To Salaries to Staff		74,700	By Gross Profit b/d		3,95,800
To Rent	26,400	28,800
Add: Outstanding Rent	2,400
To Advertising Expenses		5,000
To Travelling Expenses		31,300
To Depreciation on Buildings (10%)		60,000
To Net Profit transferred to Profit and Loss Appropriation A/c		1,96,000
		3,95,800			3,95,800

 

Dr.	Profit and Loss Appropriation Account for the year ended 31st March, 2024				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Interest on Capital X (5%)		16,000	By Net Profit from Profit and Loss A/c		1,96,000
To Interest on Capital Y (5%)		12,000
To Partner’s Salary X		48,000
To X’s Share of Profit (2/3)	80,000	1,20,000
To Y’s Share of Profit (1/3)	40,000
		1,96,000			1,96,000

 

Balance Sheet as on 31st March, 2024
Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
X’s Capital A/c:		4,24,000	Buildings	6,00,000	5,40,000
Opening Capital	3,20,000		Less: Depreciation on Buildings	60,000
Add: Interest	16,000		Debtors		1,52,000
Add: Salary	48,000		Closing Stock		64,000
Add: Profit Share	80,000		Cash in Hand		5,900
Less: Drawings	(40,000)
Y’s Capital A/c:		2,60,000
Opening Capital	2,40,000
Add: Interest	12,000
Add: Profit Share	40,000
Less: Drawings	(32,000)
Creditors		48,000
Bank Overdraft		27,500
Outstanding Rent		2,400
		7,61,900			7,61,900