Rajan and Rohit are partners in partnership firm sharing profits and losses equally. You are required to prepare Profit and Loss Account for the year ended 31st March 2020 and Balance Sheet as on that date with the help of following information:Trial…

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Q.7 Rajan and Rohit are partners in partnership firm sharing profits and losses equally. You are required to prepare Profit and Loss Account for the year ended 31st March 2020 and Balance Sheet as on that date with the help of following information: Trial Balance as on 31st March 2020 Debit BalancesAmount (₹)Credit BalancesAmount (₹) Insurance30,000Capital Account: Land and Building (Addition of ₹ 40,000 w.e.f. 1st July 2019)1,00,000Rajan1,00,000 Salaries10,000Rohit1,00,000 Export Duty5,00010% Bank loan (taken on 1st October 2019)60,000 Interest2,000Bills payable19,000 Furniture80,000 Debtors52,000 2,79,0002,79,000 Additional information: Gross profit amounted to ₹ 69,000. Insurance paid for 15 months w.e.f. 1st April 2019. Depreciate land and building at 10% p.a. and furniture at 5% p.a. Write off ₹ 2,000 for bad debts and maintain R.D.D. at 5% on sundry debtors. Closing stock is valued at ₹ 69,000.

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Answer: Net profit ₹ 9,500 (₹ 4,750 each to Rajan and Rohit); Balance Sheet total ₹ 2,89,500. Working notes Insurance: ₹ 30,000 is for 15 months, i.e. ₹ 2,000 per month. Charge for 12 months = ₹ 24,000; prepaid for 3 months = ₹ 6,000. Interest on 10% bank loan for 1st October 2019 to 31st March 2020 (6 months) = ₹ 60,000 × 10% × 6/12 = ₹ 3,000. Paid ₹ 2,000, so outstanding interest = ₹ 1,000. Depreciation on land and building: on old ₹ 60,000 for full year @ 10% = ₹ 6,000; on addition ₹ 40,000 for 9 months (1st July 2019 to 31st March 2020) = ₹ 40,000 × 10% × 9/12 = ₹ 3,000. Total ₹ 9,000. Depreciation on furniture: 5% of ₹ 80,000 = ₹ 4,000. Debtors after bad debts = ₹ 52,000 – ₹ 2,000 = ₹ 50,000. R.D.D. 5% of ₹ 50,000 = ₹ 2,500. Total charge = ₹ 2,000 + ₹ 2,500 = ₹ 4,500. The gross profit of ₹ 69,000 is given (the closing stock has already been used in the Trading Account), so closing stock is shown only in the Balance Sheet. Profit and Loss Account for the year ended 31st March 2020 Dr. ParticularsAmount (₹)Cr. ParticularsAmount (₹) To Insurance 30,000 Less: Prepaid 6,00024,000By Gross Profit b/d69,000 To Salaries10,000 To Export Duty5,000 To Interest on Bank Loan 2,000 Add: Outstanding 1,0003,000 To Depreciation on: Land and Building 9,000 Furniture 4,00013,000 To Bad Debts 2,000 Add: New R.D.D. 2,5004,500 To Net Profit transferred to: Rajan’s Capital A/c 4,750 Rohit’s Capital A/c 4,7509,500 69,00069,000 Balance Sheet as on 31st March 2020 LiabilitiesAmount (₹)AssetsAmount (₹) Capital Accounts: Rajan 1,00,000 Add: Net Profit 4,7501,04,750Land and Building 1,00,000 Less: Depreciation 9,00091,000 Rohit 1,00,000 Add: Net Profit 4,7501,04,750Furniture 80,000 Less: Depreciation 4,00076,000 10% Bank Loan 60,000 Add: Outstanding Interest 1,00061,000Debtors 52,000 Less: Bad Debts 2,000 Less: R.D.D. 2,50047,500 Bills Payable19,000Closing Stock69,000 Prepaid Insurance6,000 2,89,5002,89,500

Rajan and Rohit are partners in partnership firm sharing profits and losses equally. You are required to prepare Profit and Loss Account for the year ended 31st March 2020 and Balance Sheet as on that date with the help of following information:Trial…

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Debit Balances	Amount (₹)	Credit Balances	Amount (₹)
Insurance	30,000	Capital Account:
Land and Building (Addition of ₹ 40,000 w.e.f. 1st July 2019)	1,00,000	Rajan	1,00,000
Salaries	10,000	Rohit	1,00,000
Export Duty	5,000	10% Bank loan (taken on 1st October 2019)	60,000
Interest	2,000	Bills payable	19,000
Furniture	80,000
Debtors	52,000
	2,79,000		2,79,000

Dr. Particulars	Amount (₹)	Cr. Particulars	Amount (₹)
To Insurance 30,000 Less: Prepaid 6,000	24,000	By Gross Profit b/d	69,000
To Salaries	10,000
To Export Duty	5,000
To Interest on Bank Loan 2,000 Add: Outstanding 1,000	3,000
To Depreciation on: Land and Building 9,000 Furniture 4,000	13,000
To Bad Debts 2,000 Add: New R.D.D. 2,500	4,500
To Net Profit transferred to: Rajan’s Capital A/c 4,750 Rohit’s Capital A/c 4,750	9,500
	69,000		69,000

Liabilities	Amount (₹)	Assets	Amount (₹)
Capital Accounts: Rajan 1,00,000 Add: Net Profit 4,750	1,04,750	Land and Building 1,00,000 Less: Depreciation 9,000	91,000
Rohit 1,00,000 Add: Net Profit 4,750	1,04,750	Furniture 80,000 Less: Depreciation 4,000	76,000
10% Bank Loan 60,000 Add: Outstanding Interest 1,000	61,000	Debtors 52,000 Less: Bad Debts 2,000 Less: R.D.D. 2,500	47,500
Bills Payable	19,000	Closing Stock	69,000
		Prepaid Insurance	6,000
	2,89,500		2,89,500