omtex.co.in : Practise Problem | Q 3 | Page 56 From the following Trial Balance and adjustments given below of Reena and Aarti,

Balbharati solutions for Book-keeping and Accountancy 12th Standard Hsc Maharashtra State Board

Chapter 1 Introduction to Partnership and Partnership Final Accounts Practise Problem [Pages 54 - 61]

Practise Problem | Q 3 | Page 56

From the following Trial Balance and adjustments given below of Reena and Aarti, you are required to prepare Trading and Profit and Loss Account for the year ended 31st March 2019 and Balance Sheet as on that date.

Trial Balance as on 31st March 2019

Debit Balance	Amount ₹	Credit Balance	Amount ₹
Purchases	35,500	Sales	58,200
Sundry Debtors	40,000	Sundry Creditors	25,700
Sales Returns	1,000	Purchases Returns	500
Opening Stock	18,100	R.D.D	800
Bad debts	500	Discount	50
Land & Building	25,000	Commission	250
Furniture	20,000	Capital :
Discount	1,000	Reena	50,000
Royalties	700	Aarti	30,000
Rent	1,900
Salaries	3,000
Wages	800
Insurance	1,500
Drawings :
Reena	2,000
Aarti	1,000
Cash at Bank	11,500
Cash in Hand	2,000
	1,65,500		1,65,500

Adjustments :

1) Closing Stock valued at ₹ 22,000.

2) Write off ₹ 900 for Bad & doubtful debts and create a provision for Reserve for doubtful debts ₹ 1,000.

3) Create a provision for Discount on Debtors @3% and creditors @5%.

4) Outstanding Expenses - Wages ₹ 700 and Salaries ₹800.

5) Insurance is paid for 15 months, w.e.f. 1st April 2018

6) Depreciate Land and Building @5%

7) Reena & Aarti are Sharing Profits & Losses in their Capital Ratio.

Solution:

In the books of Reena and Aarti Trading and Profit and Loss Account for the year ended on 31st March 2019

Dr.					Cr.
Particulars	Amount ₹	Amount ₹	Particulars	Amount ₹	Amount ₹
To Opening Stock		18,100	By Sales	58,200
To Purchases	35,500		Less: Sales Return	1,000	57,200
Less: Purchase Return	500	35,000	By Closing Stock		22,000
To Royalties		700
To Wages	800
Add: O/s Wages	700	1,500
To Gross Profit c/d		23,900
		79,200			79,200
To Rent		1,900	By Gross Profit b/d		23,900
To Salaries	3,000		By Commission		250
Add: O/s Salaries	800	3,800	By Discount		50
To Insurance	1,500		By R.D.C. (New)		1,285
Less: Prepaid Ins.	300	1,200
To Depreciation on Land and building		1,250
To R.B.D.D. A/c
Bad debts	500
Add: New Bad debts	900
Add: New Reserve	1,000
	2,400
Less: Old Reserve	800	1,600
To Reserve for Discount on Debtors A/c
Discount	1,000
Add: New Reserve for Discount	1143	2,143
To Net Profit (Transferred to Capital A/cs)
Reena	8,495
Aarti	5,097	13,592
		25,485			25,485

Balance Sheet as on 31st March 2019

Liabilities	Amount ₹	Amount ₹	Assets	Amount ₹	Amount ₹
Capital Account: Reena			Land and Building	25,000
Opening Balance	50,000		Less: Depreciation	1,250	23,750
Add: Net Profit	8,495		Furniture		20,000
Less: Drawings	2,000	56,495	Closing Stock		22,000
Capital Account: Aarti			Sundry Debtors	40,000
Opening Balance	30,000		Less: Bad Debts (New)	900
Add: Net Profit	5,097			39,100
Less: Drawings	1,000	34,097	Less: Provision for Doubtful Debts (New)	1,000
Sundry Creditors	25,700			38,100
Less: Provision for Discount on creditors	1,285	24,415	Less: Provision for Discount on Debtors 3%	1,143	36,957
Outstanding expenses			Prepaid Insurance Premium		300
Wages	700		Cash at Bank		11,500
Salaries	800	1,500	cash in Hand		2,000

		1,16,507			1,16,507

Working Notes:

(1) Insurance premium ₹ 1,500 is paid for 15 months i.e. prepaid insurance premium for 3 months = ₹ 300.

(2) Reserve for Discount on Debtors = 3% on (Debtors – New Bad debts – New Reserve) = 3% x (40000 - 900 - 1000) = 3% x (40000 - 1900) = 3% x 38100 = ₹ 1143

(3) Reserve for Discount on Creditors = 5% on (Value of Creditors) = 5% x 25700 = ₹ 1285.

(4) Profit and Loss ratio = Capital ratio = 50,000: 30,000 = 5: 3.

Balbharati Solutions for Book-keeping and Accountancy 12th Standard Hsc Maharashtra State Board.

Chapter 1: Introduction to Partnership and Partnership Final Accounts

Select the most appropriate alternative from the following & rewrite the sentence.

Write the word/phrase/term, which can substitute the following sentence.

State whether the following statement is True or False with reasons.

Find an odd one.

Complete the Sentence.

Answer in one sentence only

Do you agree/disagree with the following statement

Practical Problems.