Practise Problem | Q 4 | Page 57 From the following Trial Balance of M/S Meera and Madhav.

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

Chapter 1 Introduction to Partnership and Partnership Final Accounts

Practise Problem | Q 4 | Page 57

From the following Trial Balance of M/S Meera and Madhav. 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 ₹
Stock (1/4/2018) 25,000 Bank overdraft 5,000
Debtors 80,500 Bills Payable 12,500
Bills Receivable 10,000 Creditors 68,000
Purchases 2,08,500 Sales 3,25,000
Returns (Sales Return) 1,000 Outstanding Rent 2,000
Carriage Inward 3,000 Unpaid Wages 1,500
Carriage Outwards 4,500 Capital:
Motor Vehicle 55,000   Meera 75,000
General Expenses 1,800   Madhav 75,000
Export Duty 900 Purchase Return 1,000
Advertisement 4,800
(For 3 years from 1/10/2018)
Printing & Stationery 1,200
Drawings:
  Meera 3,500
  Madhav 2,000
Leasehold Premises 1,10,000
Cash at Bank 45,000
Furniture 8,300
Total 5,65,000 Total 5,65,000

Adjustments:

  1. Closing Stock is valued at ₹32,000.
  2. Provide Provision for Doubtful Debts ₹2,000.
  3. Create reserve for Discount on Debtors @ 3%.
  4. Valued of Leasehold Premises on 31st March 2019 ₹1,00,000.
  5. Outstanding Expenses Printing & Stationary ₹500.

Solution:

In the books of M/s Meera and Madhav
Trading and Profit and Loss Account for the year ended on 31st March 2019

Particulars (Dr.) Amount ₹ Amount ₹ Particulars (Cr.) Amount ₹ Amount ₹
To Opening Stock 25,000 By Sales 3,25,000
To Purchases 2,08,500 Less: Sales Return   1,000 3,24,000
Less: Purchase Return   1,000 2,07,500 By Closing Stock 32,000
To Carriage Inward 3,000
To Gross Profit c/d 1,20,500
3,56,000 3,56,000
 
To Carriage Outward 4,500 By Gross Profit b/d 1,20,500
To General Expenses 1,800
To Export Duty 900
To Advertisement 4,800
Less: Prepaid Advt. (W.N.1) 4,000 800
To Printing & Stationery 1,200
Add: O/s Printing & Stationery   500 1,700
To Depreciation on Leasehold Premises (W.N.3) 10,000
To Provision for Doubtful Debts (New) 2,000
To Reserve for Discount on Debtors (New) (W.N.2) 2,355
To Net Profit (Transferred to Capital A/c):
  Meera (Equally) 48,223 96,445
  Madhav (Equally) 48,222
1,20,500 1,20,500

Balance Sheet as on 31st March 2019

Liabilities Amount ₹ Amount ₹ Assets Amount ₹ Amount ₹
Capital Accounts: Motor Vehicle 55,000
  Meera 75,000 Prepaid Advertisement (W.N.1) 4,000
  Add: Net Profit 48,223 Leasehold Premises 1,10,000
1,23,223 Less: Depreciation (W.N.3)  10,000 1,00,000
  Less: Drawings   3,500 1,19,723 Closing Stock 32,000
  Madhav 75,000 Debtors 80,500
  Add: Net Profit 48,222 Less: Provision for Doubtful Debts   2,000
1,23,222 78,500
  Less: Drawings   2,000 1,21,222 Less: Reserve for Discount on Debtors (W.N.2)   2,355 76,145
Bank Overdraft 5,000 Bills Receivable 10,000
Bills Payable 12,500 Cash at Bank 45,000
Creditors 68,000 Furniture 8,300
Outstanding Rent 2,000
Unpaid Wages 1,500
Outstanding Printing & Stationery 500
Total 3,30,445 Total 3,30,445

Working Notes:

  1. Advertisement expenses allocated to Profit and Loss account for the current year (2018-19) for six months (1/10/18 to 31/03/19):
    Advertisement for 3 years = ₹4,800
    Advertisement per year = ₹4,800 / 3 = ₹1,600
    Current year's expense (for 6 months) = ₹1,600 × (6/12) = ₹800
    Prepaid Advertisement = Total Paid - Current Year's Expense = ₹4,800 - ₹800 = ₹4,000
  2. Reserve for Discount on Debtors:
    Debtors = ₹80,500
    Less: New Provision for Doubtful Debts = ₹2,000
    Net Debtors = ₹78,500
    Reserve for Discount on Debtors @ 3% = 3% of ₹78,500 = ₹2,355
  3. Depreciation on Leasehold Premises:
    Opening Value of Leasehold Premises = ₹1,10,000
    Closing Value of Leasehold Premises (as per adjustment) = ₹1,00,000
    Amount written off (Depreciation) = ₹1,10,000 - ₹1,00,000 = ₹10,000

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

Chapter 1: Introduction to Partnership and Partnership Final Accounts - Question Types

Chapter 1: Practical Problems

Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board - Latest Syllabus

ACCOUNTS BOARD PAPERS

Study Material & Formats

Important Practice Papers for Board Exam

Objective Questions Bank

Difficult Words and Meanings (Accountancy - Partnership Final Accounts)

  • Trial Balance: A list of all account balances (debit and credit) in the ledger, used to check the arithmetical accuracy of bookkeeping.
  • Trading Account: A financial statement prepared to determine the Gross Profit or Gross Loss from a business's primary trading activities (buying and selling goods).
  • Profit and Loss (P&L) Account: A financial statement that summarizes revenues, costs, and expenses incurred during a specific period, to find the Net Profit or Net Loss.
  • Balance Sheet: A statement showing a company's assets, liabilities, and equity (capital) at a specific point in time, reflecting its financial position.
  • Partnership: A business structure where two or more individuals agree to share in the profits or losses of a business they jointly own and operate.
  • Final Accounts: The collective term for the Trading Account, Profit and Loss Account, and Balance Sheet, prepared at the end of an accounting year.
  • Debtors (Sundry Debtors / Accounts Receivable): Customers who owe money to the business for goods or services bought on credit.
  • Creditors (Sundry Creditors / Accounts Payable): Suppliers or entities to whom the business owes money for goods or services purchased on credit.
  • Stock (Inventory): Goods held by the business for sale, or raw materials for production. Closing Stock is unsold goods at year-end.
  • Carriage Inward: Transportation costs for bringing purchased goods into the business.
  • Carriage Outward: Transportation costs for delivering goods sold to customers.
  • Drawings: Cash or goods withdrawn by partners from the business for personal use.
  • Leasehold Premises: Property used by the business under a lease agreement for a specific period.
  • Bank Overdraft: A short-term loan facility from a bank allowing a business to withdraw more money than its account balance.
  • Outstanding Expenses: Expenses that have been incurred during the accounting period but not yet paid (e.g., Outstanding Rent, Unpaid Wages).
  • Prepaid Expenses: Expenses paid in advance for benefits to be received in a future accounting period (e.g., Prepaid Advertisement).
  • Capital: The funds invested by the partners into the business.
  • Adjustments: Entries made at the end of an accounting period to record unrecorded items or to update accounts for a true and fair view (e.g., closing stock, depreciation, provisions).
  • Provision for Doubtful Debts (PDD / RDD): An estimated amount set aside for potential losses from debtors who might not pay.
  • Reserve for Discount on Debtors: An estimated amount set aside for potential discounts to be given to debtors for early payment.
  • Gross Profit / Loss: The difference between revenue from sales and the direct cost of goods sold.
  • Net Profit / Loss: The final profit or loss after all operating and non-operating incomes and expenses are considered.
  • Liabilities: Financial obligations or debts of the business.
  • Assets: Resources or possessions owned by the business that have future economic value.
Labels: