Question 8 Chapter 2 - Unimax Class 12 Part 1 - 2021

Question 8 Chapter 2 – Unimax Class 12 Part 1

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The solution of Question 8 Chapter 2 – Unimax Class 12 Part 1:

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

8. A and B are partners sharing Profits in ratio of 3 : 2. The under mentioned Trial balance was extracted from their books on 31st March, 2021.

Particulars	Dr. Balance	Cr. Balance
A’s Capital		350000
B’s Capital		250000
A’s Drawing	40000
B’s Drawing	25000
Opening Stock (as on 1st April, 2020)	60000
Returns	6000	10000
Debtors and Creditors	120000	210000
Building	400000
Furniture	40000
Cash in Hand	60000
Bank overdraft		2000
	64000
Rent	24000
Advertising expenditure	13000
Travelling expenses	15000
Telephone Charges	17000
Carriage Inwards	23700
Carriage Outwards	14300
Commission		20000
Bills Receivable	20000
Motor Van	100000
Purchases and Sales	1000000	1200000
	2042000	2042000

You are required to prepare the Profit and Loss Account and Profit and Loss Appropriation Account for the year ended 31st March, 2021 and a Balance Sheet as on that date. The following adjustments are to be made :
(i) The value of stock on 31st March, 2021 was Rs. 82000.
(ii) Create a provision of 5% on debtors for doubtful debts.
(iii) Charge depreciation on Furniture at 15%, on Building at 2% and on Motor Van at 5%.
(iv) Provide for outstanding rent Rs. 2400 and outstanding telephone bill Rs. 2800.
(v) Partners are entitled to interest on Capital @ 5% per annum.

The solution of Question 8 Chapter 2 – Unimax Class 12 Part 1:

Trading And Profit & Loss Account For the year ended March. 31, 2006.

Particulars		Rs.	Particulars		Rs.
To Opening Stock		60000	By Sale	1200000
To Purchases	100000		Less Return	6000	1194000
Less Returns	10000	990000	By Closing Stock		82000
To Carriage inward		23700
To Gross Profit c/d		202300
		1276000			1276000
To Depreciation			By Gross Profit b/d		202300
– Furniture	6000		By Commission		20000
– Building	8000
– Motor Van	5000	19000
To Provision for bad debts		6000
To Rent	24000
Add Outstanding	2400	26400
To Telephone Bills	17000
Add Outstanding	2800	19800
To Salary		64000
To Advertisement		13000
To Travelling expense		15000
To Carriage Outward		14300
To Net Profit
– A	26880
– B	17920	44800
		222300			222300

Profit & Loss Appropriation Account For the year ended March. 31, 2006.

Particulars		Rs.	Particulars	Rs.
To Interest on Capital			By Net Profit	44800
– A	17500
– B	12500	30000
To Share of Profit
– A (3/5)	8880
– B (2/5)	5920	14800
		44800		44800

Balance Shee As on 31.3.2006

Liabilities		Amount	Assets		Amount
Creditors		210000	Building	400000
Bank Overdraft		2000	Less Dep.	8000	392,000
Outstanding Rent		2400	Furniture	40,000
Outstanding Bills		2800	Less Dep.	6,000	34000
A’s Capital	3,50000		Motor Van	100000
Add Interest	17500		Less: Depreciation	5000	95000
Add Net Profit	8880		Cash in hand		60000
Less Drawings	40,000	336380	Bills receivable		20000
B’s Capital	250000		Debtors	120000
Add Interest	12500		Less Provision	6000	114000
Add Net Profit	5920		Stock		82000
Less Drawings	25000	243420
		797000			797000