Education: Satish and Pramod Practise Problem | Q: 7 | Page no. 59 Chapter 1: Introduction to Partnership and Partnership Final Accounts

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Chapter 1: Introduction to Partnership and Partnership Final Accounts

Practise Problem | Q: 7 | Page no. 59

Satish and Pramod are Partners. Prepare Trading Account and Profit and Loss Account for the year 31st March 2019. You have to find out Gross Profit and Net Profit only.

Trial Balance as on 31st March 2019

Debit Balance	Amount ₹	Credit Balance	Amount ₹
Stock (1/4/218)	8,700	Sales	68,000
Purchases	18,300	Dividend	2,000
Wages	1,000	Purchases Return	500
Insurance	800	Sundry Creditors	13,000
Unproductive Wages	1,400	10% Bank Loan	8,000
Warehouse Rent	600	(w.e.f. 1/7/2018)
Carriage Outward	1,200	Other Receipts	1,000
Sales Return	600
Export Duty	1,400
Customs Duty	800
Sundry Debtors	40,000
Investments	15,700
Factory Rent	1,600
Postage & Telegram	400
	92,500		92,500

Adjustments :

1) The Closing Stock is valued at ₹ 15,400.

2) Outstanding Wages ₹ 500.

3) Create provision for Bad debts₹ 800 and maintain R.D.D 3% on Sundry Debtors.

4) Goods of ₹ 1,800 distributed as a free sample.

5) Goods of ₹ 2,000 were sold and delivered on 31st March 2019 but no entry is passed in the Books of Account.

(Ans : G.P. ₹ 56,200, N.P. ₹ 48,964 )

Solution:

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

Particulars	Amount ₹	Amount ₹	Particulars	Amount ₹	Amount ₹
To Opening Stock		8700	By Sales	68,000
To Purchases	18,300		Less: Sales Return	600
Less: Purchase Return	500	17,800		67,400
To Wages	1,000		Add: Unrecorded Sales	2,000	69,400
Add: O/s Wages	500	1,500	By Closing Stock		15,400
To Custom Duty		800	By Goods Distributed as Free Samples		1,800
To Factory Rent		1,600
To Gross Profit c/d		56,200
		86,600			86,600
To Advertisement Expenses		1,800	By Gross Profit b/d		56,200
To Insurance		800	By Dividend		2,000
To Unproductive Wages		1,400	By Other Receipts		1,000
To Carriage Outward		1,200
To Warehouse Rent		600
To Export Duty		1,400
To Postage & Telegram		400
To O/s Interest on Bank Loan		600
To R.B.D.D A/c
Bad debts
Add: New Bad debts	800
Add: New Reserve	1,236	2,036
To Net Profit (Transferred to Capital A/cs)
Satish	24,482
Pramod	24,482	48,964
		59,200			59,200

Working Notes:

(1) Here only gross profit and net profit are to find out. Therefore, the Balance Sheet is not prepared.

(2) Interest on 10 % bank loan is calculated for 9 months (From 1/7/2018 to 31/3/2019)

Interest = (PNR/100) = 8000 x 10% x (9/12) = ₹ 600

(3) Goods distributed as free samples is an advertisement expense for business.

(4)

Sundry Debtors	₹ 40,000
Add: Unrecorded Sales	₹ 2,000
	₹ 42000
Less: Provision for Bad Debts	₹ 800
	₹ 41,200
Less : R.D.D. (New) (3 % of 41,200)	₹ 1,236
	₹ 39,964