Question

Dinker and Ravinder were partners sharing profits and losses in the ratio of 2:1. The following balances were extracted from the books of account, for the year ended December 31, 2017.

Account Name	Debit Amount Rs	Credit Amount Rs
Capital
Dinker		2,35,000
Ravinder		1,63,000
Drawings
Dinker	6,000
Ravinder	5,000
Opening Stock	35,100
Purchases and Sales	2,85,000	3,75,800
Carriage inward	2,200
Returns	3,000	2,200
Stationery	1,200
Wages	12,500
Bills receivables and Bills payables	45,000	32,000
Discount	900	400
Salaries	12,000
Rent and Taxes	18,000
Insurance premium	2,400
Postage	300
Sundry expenses	1,100
Commission		3,200
Debtors and creditors	95,000	40,000
Building	1,20,000
Plant and machinery	80,000
Investments	1,00,000
Furniture and Fixture	26,000
Bad Debts	2,000
Bad debts provision		4,600
Loan		35,000
Legal Expenses	200
Audit fee	1,800
Cash in Hand	13,500
Cash at Bank	23,000
	8,91,200	8,91,200

Prepare final accounts for the year ended December 31,2017, with following adjustment:

(a)  Stock on December 31,2017, was Rs 42,500.

(b)  A Provision is to be made for bad debts at 5% on debtors

(c)  Rent outstanding was Rs 1,600.

(d) Wages outstanding were Rs 1,200.

(e)  Interest on capital to be allowed on capital @ 4% per annum and interest on drawings to be charged @ 6% per annum.

(f)  Dinker and Ravinder are entitled to a Salary of Rs 2,000 per annum

(g)  Ravinder is entitled to a commission Rs 1,500.

(h)  Depreciation is to be charged on Building @ 4%, Plant and Machinery, 6%, and furniture and fixture, 5%.

(i)   Outstanding interest on loan amounted to Rs 350.

Answer 1

Financial Statement as on December 31, 2017

Trading Account

Dr.                                                                                 Cr.

Particulars					Amount Rs	Particulars				Amount Rs
Opening Stock					35,100	Sales			3,75,800	3,72,800
Purchases			2,85,000		2,82,800	Less: Sales Return			(3,000)
Less: Purchases Return			(2,200)			Closing Stock				42,500
Carriage Inwards					2,200
Wages				12,500	13,700
Add: Outstanding				1,200
Gross Profit					81,500
					4,15,300					4,15,300

Profit and Loss Account

Dr.                                                                                 Cr.

Particulars				Amount Rs	Particulars				Amount Rs
Stationery				1,200	Gross Profit				81,500
Discount Allowed				900	Discount Received				400
Salaries				12,000	Commission				3,200
Rent & Taxes			18,000	19,600
Add: Outstanding			1,600
Insurance Premium				2,400
Postage				300
Sundry Expenses				1,100
Depreciation on
Building				4,800
Plant and Machinery				4,800
Fixtures and Fittings				1,300
Provision for Bad Debts			4750	2,150
Add: Bad Debt			2,000
			6,750
Less: (Old) Provision for Bad Debt			(4,600)
Legal Expenses				200
Audit Fee				1,800
Outstanding Interest on Loan				350
Profit and Loss Appropriation				32,200
				85,100					85,100

Profit and Loss Appropriation Account

Dr.                                                                                 Cr.

Particulars			Amount Rs	Particulars			Amount Rs
Interest on Capital				Net Profit			32,200
Dinker		9,400	15,920	Interest on Drawings
Ravinder		6,520		Dinker		180
Partner’s Salaries				Ravinder		150	330
Dinker		2,000	4,000
Ravinder		2,000
Commission (Ravinder)			1,500
Profit transferred to
Dinker’s Capital		7,407	11,110
Ravinder’s Capital		3,703
			32,530				32,530

Partners’ Capital Account

Dr.                                                                                 Cr.

Particulars	Dinker	Ravinder	Particulars	Dinker	Ravinder
Drawings	6,000	5,000	Balance b/d	2,35,000	1,63,000
Interest on Drawings	180	150	Interest on Capital	9,400	6,520
Balance c/d	2,47,627	1,71,573	Partner’s Salaries	2,000	2,000
			Profit & Loss Appropriation	7,407	3,703
			Commission		1,500
	2,53,807	1,75,223		2,53,807	1,75,223

Balance Sheet

Liabilities				Amount  Rs	Assets		Amount  Rs
Bills Payable				32,000	Bills Receivables		45,000
Creditors				40,000	Debtors	95,000	90,250
Loan			35,000	35,350	Less: 5% Provision for Bad Debts	(4,750)
Add: Outstanding Interest			350		Building	120000	1,15,200
Rent Outstanding				1,600	Less: 4% Depreciation	(4,800)
Wages outstanding				1,200	Closing Stock		42,500
Capital:					Plant and Machinery	80,000	75,200
Dinker		2,47,627			Less: 6% Depreciation	(4,800)
Ravinder		1,71,573		4,19,200	Investments
					Furniture and Fixtures	26,000
					Less: 5% Depreciation	(1,300)	24,700
					Cash in Hand		13,500
					Cash at Bank		23,000
				5,29,350			5,29,350