From the following Trial Balance of Rajini and Kamal, You are required to prepare a

Trading and Profit and Loss account for the year ended 31st March, 2014 and Balance
sheet as on that date after taking into consideration the additional information. They
share profits and losses in their capital ratio.

Trial Balance as on 31st March, 2014

Particulars Amounts Particulars Amounts

Drawings Capital Account
Rajini 2000 Rajini 40000
Kamal 1000 Kamal 1000
Opening Stock 12000 Creditors 30000
Purchases 80000 Sales 140000
Office Salaries 6000 Return Outwards 2400
Royalties 2000 Return Outwards 2400
Trade Expenses 1400 Bills Payable 6000
Advertisement 5200 Reserve Fund 4000
Wages & Salaries 10400
Cash in Hand 8000
Debtors 50000
Bad debts 400
Investments 16000
Motor Van 30000
Furniture 10000
Office Rent 3400
Plant & Machinery 24000
Freehold Property 16000
Bills Receivable 4000
Discount 1600
2, 83, 400 2, 83, 400

Adjustments:
1. Closing stock was valued at Rs. 17, 600
2. Audit Fee for the year was outstanding Rs. 2, 400
3. Create R.D.D at 5% on Debtors.
4. The goods for Rs. 5, 600 purchased and received on 25th March, 2014 were not recorded in
the purchase book.
5. Depreciate freehold property at 10% and Motor Van at 25%

Solution: In the books of Rajini and Kamal

Trading A/c for the year ended 31.3.14
Particulars Amount Amount Particulars Amount Amount
To Opening Stock 12000 By Sales 140000
To Purchases 80000
(-) Return -2400
77600
(+) Unrecorded 5600 83200
To Royalties 2000
To Wages & Salaries 10400 By Closing Stock 17600
To Gross Profit C/d 50000
157600 157600

Profit and Loss A/c for the year ended 31 – 3 – 14

Particulars Amount Amount Particulars Amount Amount
To Office Salaries 6000 By Gross Profit b/d 58000
To Trade Expenses 1400
To Advertisement 5200
To Bad debts 400
(+) F.B.D. -
(+) N.R.D.D. 2500
(-) O.R.D.D. -1000 1900
To Office Rent 3400
To Discount 1600
To Outstanding Audit Fees 2400
To Net Profit C/d
Rajini 11240
Kamal 16860 28100
50000 50000

Partners Capital A/c

Particulars Rajini Kamal Particulars Rajini Kamal
To Drawings 2000 1000 By Balance b/d 40000 60000
To balance c/d 49240 75860 By Net Profit b/d 11240 16860
51240 76860 51240 76860

Balance Sheet as on 31.3.14

Liabilities Amount Amount Assets Amount Amount

Capital A/c Cash in hand 8000
Rajini 49240 Debtors 50000
Kamal 75860 125100 (-) N.R.D.D. -2500 47500
Creditors 30000 Investments 16000
(+) Unrecorded Purchases 5600 35600 Motor Van 30000
Bills Payable 6000 Furniture 10000
Reserve Fund 4000 Plant & Machinery 24000
Outstanding Audit Fees 2400 Freehold Property 16000
Bills Receivable 4000
Closing Stock 17600
173100 173100
 Asha and Nisha are the partners sharing profits and losses equally. You are required to
prepare the Trading and profit and loss account for the year ended 31st December,
1997 and a Balance sheet as at that date after making the necessary adjustments.

Trial Balance as on 31st December, 1997

Debit Balance Amount Credit Balance Amount
Buildings 70000 Asha’s Capital 80000
Plant and Machinery 60000 Nisha’s Capital 100000
Furniture 16000 Discount Received 1800
Sundry Debtors 28800 Loan From Vijay 30500
Return Inwards 6000 Sales 120000
Discount 2600 Sundry Creditors 30000
Printing and Stationery 1500 Reserve for Bad Debts 2000
Insurance Charges 1600 Return Outward 3700
Bad debts 1400
Salaries 19300
Purchases 98000
Cash at Bank 25800
Stock ( on 1.1.97) 20000
Carriage Inwards 2500
Legal Charges 500
Asha’s Drawings 8000
Nisha’s Drawings 6000
3,68,000 3,68,000

Adjustments:

1. The stock on 31.12.97 was of the value of Rs. 44,000 which is less than its market value by
2,000.
2. On 24th December, 1997 stock of the value of Rs. 6,000 was stolen Insurance company
admitted the claim for Rs. 4,000 only and paid the amount on 7th Jan 1998.
3. Goods worth Rs. 4,000 were received on 31st December, 1997 and were included in the
closing stock, but purchase invoice was omitted to be entered in the books.
4. Make reserve for discount at 5% on debtors and creditors.

43200 18360 81180-103180 247160

GROSS NET PARTNERS CAPITAL ACCOUNT BALANCE SHEET
PROFIT PROFIT BALANCE TOTAL

Solution:
In the books of M/s Asha and Nisha
Trading Account for the year ended 31.12.1997

Particulars Amt. Amt. Particulars Amt. Amt.

To Opening Stock 20000 By Sales 120000
To Purchases 98000 (-) Return (6000) 114000
(-) Return (3700) By Goods was Stolen 6000
94300
(+) Unrecorded 4000 98300
To Carriage inward 2500 By Closing Stock 44000
To Gross Profit C/d 43200
164000 164000

Profit and Loss Account for the year ended 31.12.1997

Particulars Amt. Amt. Particulars Amt. Amt.
To Salaries 19300 By Gross Profit b/d 43200
To Discount 2600 By Discount received 1800
To Printing & Stationery 1500 By Discount on Creditors 1700
To Insurance Charges 1600 By O.R.D.D. 2000
To Legal Charges 500 (-) Old Bad debts (1400)
To Loss on Goods Stolen 2000 (-) F.B.D. -
To Discount on Debtors 1440 (-) N.R.D.D. - 600
To Net Profit C/d
Asha 9180
Nisha 9180 18360
47300 47300

Partners Current Account

Particulars Asha Nisha Particulars Asha Nisha
To Drawings 8000 6000 By Balance b/d 80000 100000
To Balance c/d 81180 103180 By Net Profit b/d 9180 9180
89180 109180 89180 109180

Balance Sheet as on 31.12.1997

Liability Amt. Amt. Assets Amt. Amt.
Capital A/c Buildings 70000
Asha 81180 Plant and Machinery 60000
Nisha 103180 184360 Furniture 16000
Loan from Vijay 30500 Sundry debtors 28800
Sundry Creditors 30000 (-) Discount (1440) 27360
(+) Unrecorded 4000 Cash at bank 25800
34000 Closing Stock 44000
(-) Discount (1700) 32300 Insurance Claim 4000
247160 247160
Q.7. Ashok and Tanaji are Partners sharing Profit and Losses in the ratio 2:3 respectively. Their
Trial Balance as on 31st March, 2007 is given below. You are required to prepare Trading and
Profit and Loss Account for the year ended 31st March, 2007 and Balance Sheet as on that
date after taking into account the given adjustments.

Trial Balance as on 31st March, 2007

Particulars Amt. Particulars Amt.
(Rs.) (Rs.)
Purchases 98,000 Capital:
Patents Right 4,000 Ashok 30,000
Building 1,00,000 Tanaji 40,000
Stock (1.04.2006) 15,000 Provident Fund 7,000
Printing and Stationery 1,750 Creditors 45,000
Sundry Debtors 35,000 10% Bank Loan taken on 12,000
Wages and Salaries 11,000 1stApril 2006
Audit Fees 700 Sales 1,58,000
Sundry Expenses 3,500 Reserve for Doubtful Debts 250
Furniture 8,000 Purchase Returns 3,500
Investment 10,000
Cash 4,000
Provident Fund Contribution 800
Carriage Inwards 1,300
Travelling Expenses 2,700
2,95,750 2,95,750

Adjustments:
(1) Closing stock is valued at the cost of Rs. 15,000 while its market price is Rs.18,000.
(2) On 31st March, 2007 the stock of stationery was Rs. 500.
(3) Provide reserve for bad and doubtful debts at 5% on debtors.
(4) Depreciate building at 5% and patent rights at 10%.
(5) Interest on capitals is to be provided at 5% p.a. (20)

Trading Account for the year ended 31st March 2007

Particulars Rs. Rs. Particulars Rs. Rs.
To Opening Stock 15,000 By Sales 1,58,000
To Purchases 98,000
Less: Returns 3,500 94,500
To Wages & Salaries 11,000
To Carriage Inwards 1,300
To Gross Profit c/d 51,200 By Closing Stock 15,000
1,73,000 1,73,000
Profit & Loss A/c for the year ended 31st March 2007
Particulars Rs. Rs. Particulars Rs. Rs.
To Printing & Stationery 1,750 To Gross Profit b/d 51,200
Less: Stock 500 1,250
To Audit Fees 700
To Sundry Expenses 3,500
To Provident Fund
Contribution 800
To Travelling Expenses 2,700
To Bad Debts -
Add: New Bad debts -
Add: New R.D.D. 1,750
1,750
Less: Old R.D.D. 250 1,500
To Depreciation on
Patent Right 400
Building 5,000 5,400
To Interest on Capital
Ashok 1,500
Tanaji 2,000 3,500
To Interest on loan 1,200
To Net Profit
Ashok (2/5) 12260
Tanaji (3/5) 18390 30650
51,200 51,200
Partner’s Capital A/c
Particulars Ashok Tanaji Particulars Ashok Tanaji
By Balance b/d 30,000 40,000
By Interest on Capital 1,500 2,000
To Balance c/d 43,760 60,390 By Net Profit 12,260 18,390
43,760 60,390 43,760 60,390
Balance Sheet as on 31-3-2007
Liabilities Rs. Rs. Assets Rs. Rs.
Partners Capital
Ashok 43,760 Patents Right 4,000
Tanaji 60,390 1,04,150 (-) 10% Depreciation 400 3,600
Building 1,00,000
Less: 5% 5,000 95,000
Depreciation
Provident Fund 7,000 Sundry Debtors 35,000
Creditors 45,000 Less: New R.D.D. 1,750 33,250
Bank Loan (10%) 12,000 Furniture 8,000
Add: Interest 1,200 13,200 Investment 10,000
Cash 4,000
Closing Stock 15,000
Stock of Stationery 500
1,69,350 1,69,350
The following trial balance have been taken out from the books of XYZ as on 31st
December, 2005.

Dr. Cr.
$ $
Plant and Machinery 100,000
Opening stock 60,000
Purchases 160,000
Building 170,000
Carriage inward 3,400
Carriage outward 5,000
Wages 32,000
Sundry debtors 100,000
Salaries 24,000
Furniture 36,000
Trade expense 12,000
Discount on sales 1,900
Advertisement 5,000
Bad debts 1,800
Drawings 10,000
Bills receivable 50,000
Insurance 4,400
Bank balances 20,000
Sales 480,000
Interest received 2,000
Sundry creditors 40,000
Bank loan 100,000
Discount on purchases 2,000
Capital 171,500

795,500 795,500

Closing stock is valued at $90,000

Required: Prepare the trading and profit and loss account of the business for the year ended
31.12.2005 and a balance sheet as at that date.

XYZ
Trading and Profit and Loss Account
For the year ended 31st, December 2005

Opening stock 60,000 Sales 480,000

Purchases 160,000 Less 1,900 478,100
 discount
Less discount 2,000 158,000
Closing
90,000
stock
Carriage inward 3,400
Wages 32,000
Gross profit
314,700
(transferred to P&L)

568,100 568,000

Gross
profit
Carriage outward 5,000 314,700
(transferred
to P&L)
Interest
Salaries 24,000 2,000
received
Trade expenses 12,000
Advertisement 5,000
Bad debts 1,800
Insurance 4,400
Net profit
(transferred to 264,500
capital)

316,700 316,700

Note: Discount on purchases and discount on sales are deducted from purchases and sales
respectively. They may be shown on the credit and debit side of profit and loss account
respectively and it will not affect the net profit of the business. The gross profit will be
affected if discount is treated so.

XYZ
Balance Sheet
For the year ended 31st, December 2005

Assets $ Liabilities $
Current
Current Assets:
Liabilities:
Bank balance 20,000 Sundry creditors 40,000
Bills receivable 50,000 Bank loan 100,000
Fixed and Long
Sundry debtors 100,000
Term:
Closing stock 90,000 Capital 171,500
Fixed Assets: +Net profit 264,500
Furniture 36,000
Plant and Machinery 100,000 -Drawings 10,000 426,000
Building 170,000

566,000 566,000