Question

From the following Trial Balance of Parth and Zalak and given Adjustments, prepare Final Accounts for the year ending on 31st March 2019.

Trial Balance as of 31st March 2019

Adjustments:

1. Closing stock is valued at ₹ 99,000. 

2. Write off ₹ 3,000 as further bad debts and maintain 5% R.D.D. on debtors. 

3. Depreciate Plant and Machinery by 10%, Motor car by 15%, Patents by 20%. 

4. Furniture costing ₹ 12,000 sold for ₹ 7,500 was wrongly included in sales and the remaining furniture is valued at ₹ 33,000. 

5. Outstanding expenses are Wages ₹ 8,100, Salaries ₹ 6,750. The insurance premium is paid for the year ended 31st December 2019.

6. Goods worth ₹ 67,500 were destroyed by fire and the insurance company accepted the claim for only ₹ 57,000. 

7. Sale of goods of ₹ 15,000 was wrongly considered as the sale of machinery.

Answer 1

In the books of Parth and Zalak

Trading and Profit and Loss Account for the year ended on 31st March, 2019

Partner's Current Accounts

Balance Sheet as of 31st March 2019

Working Notes:

1. Interest on loan @18 % is calculated for 3 months, (i.e. 1/1/2019 to 31/3/2019)

I = \(\frac{PRN}{100}\)

= 30,000 × \(\frac{18}{100}\times\frac{3}{12}\)

= ₹ 1,350

2. Net loss by fire = 67,500 – 57,000 = ₹ 10,500

3. Depreciation on furniture = Book value – Value given in adj.

= 45,000 – 33,000

= ₹ 12,000

4. Rent is paid for 10 months i.e. 2 months rent is outstanding.

5. Insurance premium is paid upto 31st Dec., 2019. i.e. 9 months insurance premium is prepaid.

= 5,400 × \(\frac{9}{12}\)

= ₹ 4,050

6. Loss on sale of furniture = Cost of furniture sold – Sale proceeds of furniture

= 12,000 – 7,500

= ₹ 4,500