Prepare Trading and Profit & Loss account for the year ended 31st March, 2014 and Balance sheet as on that date from the following Trial Balance of Kaveri and Narmada.

Debit Balance	Rs.	Credit Balance	Rs.
Kaveri’s Drawings Narmada’s Drawings Land & Building Plant & Machinery Stock(1.4.2013) Purchases Wages Carriage Outward Carriage Inward Coal Salary Rent, Rates & Taxes Discount Allowed Cash & Bank Balance Sundry Debtors Printing & Stationery Bad Debts Advertisement Sales Return Furniture Bills Receivable	4,000 4,000 21,000 12,600 8,000 12,000 5,000 500 400 1,260 7,500 560 300 5,080 9,000 460 240 1,750 400 1,240 1,600	Kaveri’s Capital Narmada’s Capital Bills Payable Creditors Purchase Returns Sales	12,000 20,000 6,790 14,600 500 43,000
	96,890		96,890

Adjustments:

1.      Closing Stock is valued at Rs. 10,000/- at cost whose market value was Rs. 15,000/-

2.      Provision for doubtful debts should be maintained at 5% on sundry debtors.

3.      Kaveri has withdrawn goods for his personal use Rs. 500 for which no entry is passed.

4.      Fire occurred in the Godown and goods worth Rs. 5, 000 were destroyed, but Insurance Company admitted Claim for Rs. 3, 500.

5.      Rates prepaid Rs. 60.

Solution:

In the books of M/s KAVERI & NARMADA       

Trading Account for the year ended 31.03.2014

Particulars	Amt.	Amt.	Particulars	Amt.	Amt.
To Opening Stock		8000	By Sales	43000
To Purchases	12000		(-) Return	400	42600
(-) Return	500	11500	By Goods taken over by Partners
To Wages		5000	Kaveri		500
To Carriage inward		400	By Goods destroyed on fire		5000
To Coal		1260
			By Closing Stock		19000
To Gross profit c/d		31940
		58100			58100

Profit and Loss Account for the year ended 31.03.2014

Particulars	Amt.	Amt.	Particulars	Amt.	Amt.
To carriage outward		500	By Gross Profit b/d		31940
To Salary		7500
To Rent, Rates & Taxes	560
(-) Prepaid	60	500
To Discount Allowed		300
To Printing & Stationery		460
To Bad debts	240
(+) FBD	-
(+) NRDD	450
(-) ORDD	-	690
To Advertisement		1750
To Goods lost on fire [5000 – 3500]		1500
To Net Profit c/d
Kaveri	9370
Narmada	9370	18740
		31940			31940

Partners Capital Account

Particulars	Kaveri	Narmada	Particulars	Kaveri	Narmada
To Drawings	4000	4000	By balance b/d	12000	20000
To Drawings [Goods]	500		By Net Profit b/d	9370	9370
To Balance c/d	16870	25370
	21370	29370		21370	29370

Balance Sheet as on 31.03.2014

Liability	Amt.	Amt.	Assets	Amt.	Amt.
Capital A/c			Land & Building		21000
Kaveri	16870		Plant & Machinery		12600
Narmada	25370	42240	Cash & Bank		5080
Bills Payable		6790	Sundry Debtors	9000
Creditors		14600	(-) NRDD	450	8550
			Furniture		1240
			Bills Receivable		1600
			Closing Stock		10000
			Insurance Claim		3500
			Prepaid Rates		60
		63630			63630