Ram and Shyam are partners sharing profits and losses equally. You are required to prepare Profit and Loss Account and Balance Sheet only for the year ending 31st March, 2022 from the information given below:Trial Balance as on 31st March, 2022Debit…

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Q.7 Ram and Shyam are partners sharing profits and losses equally. You are required to prepare Profit and Loss Account and Balance Sheet only for the year ending 31st March, 2022 from the information given below: Trial Balance as on 31st March, 2022 Debit BalancesAmount (₹)Credit BalancesAmount (₹) Insurance30,000Capital Account: Land and Building (Addition of ₹ 40,000 w.e.f. 1st July, 2021)1,00,000Ram1,00,000 Salaries10,000Shyam1,00,000 Export Duty5,00010% Bank loan (taken on 1st October, 2021)60,000 Rent2,000Interest3,000 Furniture80,000Bills Payable16,000 Debtors52,000 2,79,0002,79,000 Adjustments: Closing stock was valued at ₹ 69,000. Gross Profit amounted to ₹ 69,000. Insurance paid for 15 months w.e.f. 1st April, 2021. Depreciate Land and Building @10% p.a. and Furniture @ 5% p.a. Write off ₹ 2,000 for bad debts and Maintain R.D.D. @5% on Sundry Debtors.

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Answer: Net profit ₹ 10,500 (₹ 5,250 each); Balance Sheet total ₹ 2,89,500. Working notes Insurance: ₹ 30,000 is for 15 months, i.e. ₹ 2,000 per month. Expense for 12 months = ₹ 24,000; prepaid for 3 months = ₹ 6,000. Land and Building: the original ₹ 60,000 for a full year @ 10% = ₹ 6,000; the addition of ₹ 40,000 from 1st July, 2021 for 9 months = 40,000 × 10% × 9/12 = ₹ 3,000. Total depreciation ₹ 9,000. Furniture: 80,000 × 5% = ₹ 4,000. Debtors after bad debts = 52,000 – 2,000 = ₹ 50,000; R.D.D. @ 5% = ₹ 2,500. Interest on 10% bank loan from 1st October, 2021 to 31st March, 2022 = 60,000 × 10% × 6/12 = ₹ 3,000. No payment appears in the trial balance, so it is outstanding. Interest ₹ 3,000 on the credit side of the trial balance is interest received (an income), credited to the Profit and Loss Account. Gross profit ₹ 69,000 is given, so no Trading Account is needed; closing stock ₹ 69,000 appears only in the Balance Sheet. Profit and Loss Account for the year ended 31st March, 2022 Dr. ParticularsAmount (₹)Cr. ParticularsAmount (₹) To Insurance 30,000 Less: Prepaid 6,00024,000By Gross Profit69,000 To Salaries10,000By Interest3,000 To Export Duty5,000 To Rent2,000 To Interest on Bank Loan (outstanding)3,000 To Depreciation: 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: Ram’s Capital A/c 5,250 Shyam’s Capital A/c 5,25010,500 72,00072,000 Balance Sheet as on 31st March, 2022 LiabilitiesAmount (₹)AssetsAmount (₹) Capital Accounts:Land and Building 1,00,000 Less: Depreciation 9,00091,000 Ram 1,00,000 Add: Net Profit 5,2501,05,250Furniture 80,000 Less: Depreciation 4,00076,000 Shyam 1,00,000 Add: Net Profit 5,2501,05,250Debtors 52,000 Less: Bad debts 2,000 50,000 Less: R.D.D. 2,50047,500 10% Bank Loan 60,000 Add: Outstanding interest 3,00063,000Closing Stock69,000 Bills Payable16,000Prepaid Insurance6,000 2,89,5002,89,500

Ram and Shyam are partners sharing profits and losses equally. You are required to prepare Profit and Loss Account and Balance Sheet only for the year ending 31st March, 2022 from the information given below:Trial Balance as on 31st March, 2022Debit…

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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, 2021)	1,00,000	Ram	1,00,000
Salaries	10,000	Shyam	1,00,000
Export Duty	5,000	10% Bank loan (taken on 1st October, 2021)	60,000
Rent	2,000	Interest	3,000
Furniture	80,000	Bills Payable	16,000
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	69,000
To Salaries	10,000	By Interest	3,000
To Export Duty	5,000
To Rent	2,000
To Interest on Bank Loan (outstanding)	3,000
To Depreciation: 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: Ram’s Capital A/c 5,250 Shyam’s Capital A/c 5,250	10,500
	72,000		72,000

Liabilities	Amount (₹)	Assets	Amount (₹)
Capital Accounts:		Land and Building 1,00,000 Less: Depreciation 9,000	91,000
Ram 1,00,000 Add: Net Profit 5,250	1,05,250	Furniture 80,000 Less: Depreciation 4,000	76,000
Shyam 1,00,000 Add: Net Profit 5,250	1,05,250	Debtors 52,000 Less: Bad debts 2,000 50,000 Less: R.D.D. 2,500	47,500
10% Bank Loan 60,000 Add: Outstanding interest 3,000	63,000	Closing Stock	69,000
Bills Payable	16,000	Prepaid Insurance	6,000
	2,89,500		2,89,500