Final account question with solution

Q.7.   Ashok and Tanaji are Partners sharing Profit and Losses in the ratio 2:3 respectively. Their Trial Balance as on 31^st March, 2007 is given below. You are required to prepare Trading and Profit and Loss Account for the year ended 31^st March, 2007 and Balance Sheet as on that date after taking into account the given adjustments.   

Trial Balance as on 31^st March, 2007

Particulars	Amt. (Rs.)	Particulars	Amt. (Rs.)
Purchases Patents Right Building	98,000 4,000 1,00,000	Capital:      Ashok      Tanaji	30,000 40,000
Stock (1.04.2006)	15,000	Provident Fund	7,000
Printing and Stationery	1,750	Creditors	45,000
Sundry Debtors Wages and Salaries	35,000 11,000	10% Bank Loan taken on 1st April 2006	12,000
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 31^st 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 31^st March 2007

Particulars	Rs.	Rs.	Particulars	Rs.	Rs.
To Opening Stock		15,000	By Sales		1,58,000
To Purchases Less: Returns	98,000 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 31^st 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
Less: Old R.D.D.	1,750 250	1,500
To Depreciation on Patent Right Building	400 5,000	5,400
To Interest on Capital Ashok Tanaji	1,500 2,000	3,500
To Interest on loan		1,200
To Net Profit Ashok (2/5) Tanaji (3/5)	12260 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 Tanaji	43,760 60,390	1,04,150	Patents Right (-) 10% Depreciation	4,000 400	3,600
			Building Less: 5% Depreciation	1,00,000 5,000	95,000
Provident Fund Creditors		7,000 45,000	Sundry Debtors Less: New R.D.D.	35,000 1,750	33,250
Bank Loan (10%) Add: Interest	12,000 1,200	13,200	Furniture Investment		8,000 10,000
			Cash		4,000
			Closing Stock		15,000
			Stock of Stationery		500
		1,69,350			1,69,350