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Question
State whether the following statement is True or False.
Partners must share profits and losses equally.
Options
True
False
Solution
False
Explanation: It is not mandatory for partners to share profits and losses equally. They can share the profit/loss in any ratio as decided between them. The profits or losses will be distributed equally only when then there is an agreement to such effect or when the partnership deed is silent in this regard.
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From the following Trial Balance of Sanjiv & Sons. Prepare Trading Account and Profit & Loss Account for the year ending on 31st March 2019 and a Balance Sheet as on that date.
| Particulars | Debit Amount (₹) | Credit Amount (₹) |
| Opening stock | 22,000 | |
| Purchases & Sales | 1,78,000 | 4,60,000 |
| Carriage Outward | 4,800 | |
| Plant and Machinery | 50,000 | |
| Debtors and Creditors | 44,000 | 76,000 |
| Returns | 2,000 | 4,000 |
| Buildings | 58,000 | |
| Motor Van | 40,000 | |
| Printing & Stationery | 3,000 | |
| Wages | 28,000 | |
| Reserved for Bad debts | 3,200 | |
| Commission | 2,400 | |
| Office expenses | 5,400 | |
| Carriage | 9,000 | |
| Furniture | 20,000 | |
| Premises | 81.000 | |
| Loose Tools | 20,400 | |
| Drawings | 24,700 | |
| Bank Overdraft | 22,000 | |
| Cash in hand | 71,000 | |
| Dividend | 3,300 | |
| Capital | 1,40,000 | |
| Salaries | 44,000 | |
| Bills Receivable & Bills Payable | 5,600 | 8,400 |
| Bad debts | 2,400 | |
| Advertisement (for 3 year) | 6,000 | |
| 7,19,300 | 7,19,300 |
Additional information:
- Closing stock on 31st March, 2019, was at cost ₹ 60,000 and Market Price ₹ 70,000.
- Outstanding expenses: Wages ₹ 4,000, Salary ₹ 2,400
- Provide depreciation at 10% on Motor Van and 5% on Furniture.
- Write off ₹ 2,000 for bad debts and create R.D.D. at 5% on debtors.
- Provide 10% p.a. interest on capital.
Prepare Final accounts of Abdul Traders for the year ending 31st March 2019 with the help of the following Trial Balance and Adjustments.
Trial Balance as of 31st March 2019.
| Debit Balance | Amount (₹) | Credit Balance | Amount (₹) |
| Salaries | 10,000 | Interest Received | 2,400 |
| Purchases | 71,400 | Capital | 1,60,000 |
| Rent (11 months) | 2,200 | Sales | 85,000 |
| Machinery | 56,000 | Provision for Bad Debts | 2,000 |
| Advance against wages | 4,000 | Commissions Received | 1,600 |
| Opening stock | 20,000 | Bills Payable | 9,200 |
| Bad debts | 1,000 | Creditors | 56,000 |
| Prepaid Insurance | 2,400 | ||
| Wages | 2,600 | ||
| Loose Tools | 26,000 | ||
| Commission receivable | 400 | ||
| Sundry Debtors | 64,000 | ||
| Cash | 1,000 | ||
| Bank | 3,000 | ||
| Drawings | 7,600 | ||
| Freight Inward | 1,000 | ||
| Bills Receivable | 13,600 | ||
| Loan to Aruna | 30,000 | ||
| 3,16,200 | 3,16,200 |
Adjustments:
1. Closing stock valued at ₹ 89,600
2. Outstanding expenses Salaries ₹ 2,000, Wages ₹ 4,000
3. Charge depreciation on Machinery @ 10%
4. Bad debts are written off ₹ 2,000 and create a provision for bad and doubtful debts 5% on Sundry Debtors.
Following are the closing ledger balances of Deepak & Co. Prepare Trading Account and Profit & Loss Account for the year ended 31st March 2019 and Balance sheet as of that date.
Ledger Balances of Mr. Deepak and Co. as of 31st March, 2019
| Particulars | Amount (₹) | Particulars | Amount (₹) |
| Bank | 30,000 | Capital | 1,20,000 |
| Bills Payable | 7,500 | Insurance Premium | 18,000 |
| Furniture | 19,500 | (1.1.2019 to 31.12.2019) | |
| Commission Received | 3,000 | Salaries | 30,000 |
| Stock (1.4.2018) | 27,000 | Bank loan | 30,000 |
| Building | 37,500 | Sundry expenses | 7,500 |
| Wages | 7,500 | Interest paid | 1,500 |
| Creditors | 37,500 | Machinery | 25,500 |
| Bad Debts | 4,500 | Sales | 96,000 |
| R.D.D. (old) | 3,000 | Purchases | 42,000 |
| Sales Returns | 1,500 | Debtors | 31,500 |
| Purchases returns | 3,000 | ||
| Cash in hand | 16,500 |
Adjustments:
1. Closing stock was valued at ₹ 60,000
2. An amount of ₹ 3,000 is still to be received on account of commission.
3. Provision for discount on debtors and Provision for discount on Creditors are to be created 2% and 3% respectively.
4. Amount of Furniture is to reduce by ₹ 4,500 and Building by 10%.
5. Outstanding expenses Salaries ₹ 4,500 and Wages ₹ 1,500.
Following is the Trial Balance extracted from the books of Raju Traders. You are required to prepare Trading A/c, Profit and Loss A/c for the year ending on 31st March 2019 and Balance Sheet as on that date after considering the additional information given below.
Trial Balance as of 31st March 2019
| Debit Balance | Amount (₹) | Credit Balance | Amount (₹) |
| Raju's Drawings | 5,000 | Capital | 2,00,000 |
| Opening stock | 30,000 | Sales | 1,64,000 |
| Wages | 5,000 | Returns outward | 2,400 |
| Purchases | 60,000 | Creditors | 40,000 |
| Trade Expenses | 800 | Discount | 1,600 |
| Royalties | 1,600 | Bills payable | 13,600 |
| Salaries | 20,000 | ||
| Debtors | 80,000 | ||
| Plant & Machinery | 56,000 | ||
| Printing & Stationery | 2,400 | ||
| Bad debts | 900 | ||
| Discount | 1,200 | ||
| Furniture | 16,000 | ||
| Advertisement | 3,000 | ||
| Carriage outwards | 600 | ||
| Computers | 1,20,000 | ||
| Bills Receivable | 16,000 | ||
| Cash in hand | 1,100 | ||
| Cash at Bank | 2,000 | ||
| 4,21,600 | 4,21,600 |
Adjustments:
- Closing stock is valued at ₹ 40,000 at Cost Price and ₹ 44,000 as Market Price.
- Provide Depreciation on Plant and Machinery, Furniture, Computers @ 5%, 10%, 15%, respectively.
- Salaries are paid for 10 months only.
- Further Bad debts amounted to ₹ 400 and provide 10% R.D.D. on Sundry Debtors.
- Advertisement is paid for 2 years.
From the following Trial Balance of Shradha Enterprises, you are required to prepare Final Accounts for the year ending on 31st March 2019.
Trial Balance as of 31st March 2019
| Debit balances | Amount (₹) | Credit Balances | Amount (₹) |
| Opening Stock | 2,40,000 | Capital | 13,00,000 |
| Purchases | 8,50,000 | Sundry Creditors | 1,20,000 |
| Returns Inward | 15,000 | Bills Payable | 60,000 |
| Wages | 29,000 | Sales | 25,00,000 |
| Power and Fuel | 21,800 | Return Outward | 8,000 |
| Travelling Expenses | 14,700 | Discount | 2,000 |
| Audit fees | 7,000 | Bank Overdraft | 1,54,000 |
| Royalty | 72,000 | Reserve for Bad and doubtful debts | 8,000 |
| Discount | 1,750 | ||
| Postage | 13,500 | ||
| Bad debts | 3,000 | ||
| Sundry Debtors | 5,20,000 | ||
| Furniture | 1,20,000 | ||
| Plant & Machinery | 15,00,000 | ||
| Freehold Premises | 7,02,000 | ||
| Rent, Rates and Insurance | 42,250 | ||
| 41,52,000 | 41,52,000 |
Adjustments:
1. Insurance is prepaid to the extent of ₹ 2,250
2. Closing stock is valued at ₹ 3,80,000 Cost price and ₹ 4,00,000 as Market price.
3. Outstanding Expenses are Wages ₹ 6,000 and Rent ₹ 5,000
4. Write off further had debts ₹ 1,500 and provide 5% Reserve for doubtful debts.
5. Depreciation on Furniture and Plant and Machinery at 10% p.a. and on Freehold Premises at 15% p.a.
From the following Trial Balance of Rajnish & Sons and the additional information given below prepare Trading & Profit and Loss Account for the year ending on 31st March 2018 and Balance Sheet as on that date.
Trial Balance as of 31st March 2018
| Debit balances | Amount (₹) | Credit Balances | Amount (₹) |
| Stock (01.04.2017) | 1,20,000 | Capital | 6,00,000 |
| Purchases | 4,00,000 | Sales | 3,00,000 |
| Wages | 17,000 | Return outward | 8,000 |
| Carriage | 6,000 | Sudnry Creditors | 1,80,000 |
| Salaries | 60,000 | Bills Payable | 90,000 |
| Rent, Rates and Taxes | 12,000 | 8% Loan (taken on 01.10.2017) | 1,00,000 |
| Insurance | 8,000 | Bank Overdraft | 79,200 |
| Royalties | 10,000 | ||
| Discount | 4,500 | ||
| Courier charges | 5,200 | ||
| Bad Debts | 7,000 | ||
| Trade Expenses | 2,500 | ||
| Drawings | 15,000 | ||
| Machinery | 3,00,000 | ||
| Furniture | 1,50,000 | ||
| Patents | 50,000 | ||
| Sundry Debtors. | 1,90,000 | ||
| 13,57,200 | 13,57,200 |
Adjustments:
1. Closing Stock valued at ₹ 3,00,000 cost price and ₹ 3,20,000 at Market price.
2. Salaries were paid for 10 months only.
3. Insurance is paid for one year ending on 30.06.2018
4. One of the debtors Mr. Amit became insolvent, from whom ₹ 10,000 was not received.
5. 5% R.D.D. is to be maintained on Debtors.
6. Depreciate Machinery & Furniture @ 10% and 5% respectively.
