Given below is the Trial Balance of M/s Radha and Krishna on 31st March, 2004. Partners share profit & losses in the ratio of 3:2 respectively. From the following trial balance and additional information, prepare a Trading & Profit & Loss account for the year ended 31st March, 2004 and a Balance sheet as on that date.

Trial Balance as on 31^st March, 2004.

Particulars (Debit)	Rs.	Particulars (Credit)	Rs.
Partner's Current A/c		Partners Capital Account
Radha	16000	Radha	80000
Partner's Drawings		Krishna	50000
Radha	15000	Partners Current Account
Krishna	10000	Krishna	10000
Purchases	120000	Sales	365000
Returns	2500	Returns	3500
Debtors	65000	Creditors	10000
Furniture	50000	RDD	2000
Premises	160000	Provident fund	65000
Bad debts	7500	Interest on P.F. Investment	6000
Discount	5000	Outstanding Salaries  & Wages	6500
Provident Fund  Contribution	15000	General Reserve	45003
Provident Fund Investment	60000
Salaries & Wages	15003
Opening Stock	80000
Cash in hand	18000
Royalties	4000
	643003		643003

1.      The closing stock was valued at market price Rs. 90,000 which is 20% above cost.

2.      Write off bad debts Rs. 1500 and make a provision for doubtful debts @5% on debtors.

3.      Provide 2% Reserve for discount on debtors and creditors.

4.      Interest on capital is allowed @ 10% p.a. and interest on drawings be charged @ 15% p.a.

5.      Radha is entitled to receive rent for her premises at Rs. 300 p.m. where business is carried out and Krishna is to be given 5% commission on ‘Gross Profit’.

Solution:

In the books of M/s Radha and Krishna

Trading Account for the year ended 31.03.2004

Particulars	Amt.	Amt.	Particulars	Amt.	Amt.
To Opening Stock		80000	By Sales	365000
To Purchases	120000		(-) Returns	-2500	362500
(-) Returns	-3500	116500
To Royalties		4000
To Gross Profit C/d		237000	By Closing Stock		75000
		437500			437500

Profit and Loss Account for the year ended 31.03.2004

Particulars	Amt.	Amt.	Particulars	Amt.	Amt.
To Bad Debts	7500		By Gross Profit b/d		237000
(+) F.B.D.	1500		By Discount on Creditors		200
(+) N.R.D.D.	3175		By Interest on Drawings
(-) O.R.D.D.	-2000	10175	Radha	1125
To Discount		5000	Krishna	750	1875
To Provident fund Contribution		15000
To Salaries & Wages		15003
To Discount on Debtors		1207
To Interest on Capital
Radha	8000
Krishna	5000	13000
To rent on premises to Partner Radha [Rs. 300 × 12 Months]		3600
To Commission on G.P. to Krishna		11850
To Net Profit c/d
Radha	98544
Krishna	65696	164240
		239075			239075

Partners Current  Account

Particulars	Radha	Krishna	Particulars	Radha	Krishna
To Balance b/d	16000	-	By Balance b/d	-	10000
To Drawings	15000	10000	By Interest on Capital	8000	5000
To Interest on Drawings	1125	750	BY Commission on G.P.	-	11850
			By Rent on Premises	3600	-
To Balance C/d	78019	81796	By Net Profit C/d	98544	65696
	110144	92546		110144	92546

Balance Sheet as on 31.03.2004

Liability	Amt.	Amt.	Assets	Amt.	Amt.
Capital A/c			Debtors	65000
Radha	80000		(-) F.B.D.	-1500
Krishna	50000	130000		63500
Current A/c			(-) N.R.D.D.	3175
Radha	78019			60325
Krishna	81796		(-) Discount	-1207	59118
Creditors	10000		Furniture		50000
(-) Discount	200	9800	Provident Fund Investments		60000
Provident Fund	65000		Cash in Hand		18000
(+) Interest on Provident Fund Investments	6000	71000	Closing Stock		75000
Outstanding Salaries & Wages		6500	Premises		160000
General Reserve		45003
		422118			422118