Question

Zalak and Kalpana are partners sharing Profit and Losses in their Capital ratio. You are required to prepare Trading Account and Profit and Loss Account for the year ended 31st March, 2023 and Balance Sheet as on that date.

Trial Balance as on 31st March, 2023
Debit Balance	Amount (₹)	Credit Balances	Amount (₹)
Sundry Debtors	56,000	Sales	2,40,000
Purchases	1,10,000	Rent	3,600
Furniture	77,000	Sundry Creditors	77,000
Plant and Machinery	1,20,000	Purchase Return	2,000
Wages	1,600	Discount	1,000
Salaries	7,000	Bills Payable	18,000
Discount	1,600	Capital A/c:
Bills Receivable	28,800	Zalak	1,80,000
Carriage Outward	2,000	Kalpana	60,000
Postage	1,000	Current A/c:
Sales Return	1,000	Zalak	10,000
Cash in Hand	8,000	Kalpana	6,000
Cash at Bank	94,000
Insurance	4,000
Opening Stock	35,600
Trade Expenses	3,000
Warehouse Rent	5,000
Advertisement	2,000
Building	40,000
	5,97,600		5,97,600

Adjustments:

(1) Stock on 31st March, 2023 was at ₹ 74,000.

(2) Sales includes, sale of machinery of ₹ 4,000, which is sold on 1st April, 2022.

(3) Depreciation on fixed assets @ 5%.

(4) Each partner is entitled to get commission at 1 % of Gross profit and interest on Capital 5 % p.a.

(5) Outstanding Expenses: Wages ₹ 400 and Salaries ₹ 1,000.

6) Create provision for Doubtful debts @ 3 % on Sundry Debtors.

Answer 1

Dr.	In the books of Zalak and Kalpana Trading and Profit and Loss Account for the year ended on 31st March, 2023				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Opening Stock		35,600	By Sales	2,40,000	2,35,000
To Purchase	1,10,000	1,08,000	Less : Machinery Sold Wrongly Recorded as Sales	4,000
Less : Purchase Return	2,000		Less : Sales Return	1,000
To Wages	1,600	2,000	By Closing Stock		74,000
Add : O/s Wages	400
To Gross Profit c/d		1,63,400
		3,09,000			3,09,000
To Salaries	7,000	8,000	By Gross Profit b/d		1,63,400
Add : O/s Salaries	1,000		By Rent		3,600
To Discount		1,600	By Discount		1,000
To Carriage Outward		2,000
To Postage		1,000
To Insurance		4,000
To Trade Expenses		3,000
To Warehouse Rent		5,000
To Advertisement		2,000
To Provision for Doubtful Debts (New)		1,680
To Depreciation
Furniture	3,850	11,650
Plant & Machinery	5,800
Building	2,000
To Interest on Capital
Zalak	9,000	12,000
Kalpana	3,000
To Commission
Zalak	1,634	3,268
Kalpana	1,634
To Net Profit (Transferred to Capital A/c)
Zalak	84,602	1,12,802
Kalpana	28,200
		1,68,000			1,68,000

 

Dr.	Partner's Current Accounts				Cr.
Particulars	Zalak (₹)	Kalpana (₹)	Particulars	Zalak (₹)	Kalpana (₹)
To Balance c/d	1,05,236	38,834	By Balance b/d	10,000	6,000
			By Profit and Loss A/c  (Commission)	1,634	1,634
			By Profit and Loss A/c (Interest on Capital)	9,000	3,000
			By Profit and Loss A/c (Share in Prof	84,602	28,200
	1,05,236	38,834		1,05,236	38,834
			By Balance b/d	1,05,236	38,834

 

Balance Sheet as on 31st March, 2023
Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Capital Accounts:			Furniture	77,000
Zalak	1,80,000		Less : Depreciation	3,850	73,150
Kalpana	60,000	2,40,000	Plant & Machinery	1,20,000
Current A/cs:			Less: Sold on 1/4/22	4,000
Zalak	1,05,236			1,16,000
Kalpana	38,834	1,44,070	Less : Depreciation	5,800	1,10,200
Sundry Creditors		77,000	Building	40,000
Bills Payable		18,000	Less : Depreciation	2,000	38,000
Outstanding expenses			Closing Stock		74,000
Wages	400		Sundry Debtors	56,000
Salaries	1,000	1,400	Less : Provision for Doubtful Debts	1,680	54,320
			Bills Receivable		28,800
			Cash in Hand		8,000
			Cash at Bank		94,000
		4,80,470			4,80,470

Working Notes:

(1) Depreciation on fixed assets means depreciation on Furniture, Plant and Machinery and Building.

(2) Sales includes sale of Machinery of ₹ 4,000 is subtracted from sales and from Plant and Machinery.
On balance amount of Plant and Machinery ₹ 1,16,000, calculate 5 % depreciation.
i.e. 1,20,000 - 4,000 =  ₹ 1,16,000 xx 5% = ₹ 5,800.

(3) Here, on gross profit calculate 1 % commission for partners and record it to Profit and Loss A/c and in Current A/cs.

Commission payable to each partner = `1/100 xx "Gross Profit" = 1/100 xx 1,63,000 = ₹ 1,634.`