Practical Problem 03
Solution:
In the books of Reena and Aarti
Dr Trading and Profit and loss accounts for the year ended 31st March,2019 . Cr | |||||
Particular | ₹ | ₹ | Particular | ₹ | ₹ |
To Opening Stock | 18,100 | By sales | 58,200 | ||
To Purchase | 35,500 | Less: Sales Return | -1,000 | 57,200 | |
Less: Return | -500 | 35,000 | |||
To Royalty | 700 | ||||
To Wages | 800 | By Closing Stock | 22,000 | ||
Add: O/s Wages | 700 | 1500 | |||
To Gross Profit C/d | 23,900 | ||||
79,200 | 79,200 | ||||
To Bad Debts | 500 | By Gross Profit b/d | 23,900 | ||
Add: New Bad Debts | 900 | By Discount | 50 | ||
Add: New RDD | 1,000 | By Commission | 250 | ||
2,400 | BY Discount on Creditor | 1285 | |||
Less: Old RDD | -800 | 1,600 | |||
To RFDD | 1,143 | ||||
To Discount | 1,000 | ||||
To Rent | 1,900 | ||||
To Salaries | 3,000 | ||||
Add: O/S Salaries | 800 | 3,800 | |||
To Insurance | 1,500 | ||||
Less: Pre Paid Insurance | -300 | 1,200 | |||
To Dep on Land & Building | 1250 | ||||
To Net Profit C/d | |||||
REENA CAPITAL A/C | 8,495 | ||||
ARTI CAPITAL A/C | 5097 | 13592 | |||
25,485 | 25,485 | ||||
Dr Partners Capital A/c Cr | |||||
Particular | Reena | Aarti | Particular | Reena | Aarti |
To Drawing | 2,000 | 1,000 | By Bal B/d | 50,000 | 30,000 |
BY Net Profit | 8495 | 5097 | |||
To bal C/d | 56,495 | 34,097 | |||
58495 | 35097 | 58495 | 35097 | ||
Balance Sheet as on 31st March,2019 . | |||||
Liabilities | ₹ | ₹ | Asset | ₹ | ₹ |
Capital A/c | Land & Building | 25,000 | |||
Reena | 56,495 | Less: Depreciation @ 5% | -1250 | 23,750 | |
AARTI | 34,097 | 90,592 | Furniture | 20,000 | |
Sundry Creditor | 25,700 | Sundry Debtor | 40,000 | ||
Less: RFDC@5% | -1285 | 24,415 | Less: Bad Debts | -900 | |
O/S Wages | 700 | 39,100 | |||
O/S SALARIES | 800 | Less: RDD | -1000 | ||
38,100 | |||||
Less: RFDD @ 3% | -1143 | 36,957 | |||
Cash at Bank | 11,500 | ||||
Cash in Hand | 2,000 | ||||
Closing Stock | 22,000 | ||||
Prepaid Insurance | 300 | ||||
1,16,507 | 1,16,507 | ||||
Working Notes:
(1) Insurance premium ₹ 1,500 is paid for 15 months i.e. prepaid insurance premium for 3 months = ₹ 300.
(2) Reserve for Discount on Debtors = 3% on (Debtors – New Bad debts – New Reserve)
= 3% x (40000 – 900 – 1000)
= 3% x (40000 – 1900) = 3% x 38100
= ₹ 1143
(3) Reserve for Discount on Creditors = 5% on (Value of Creditors) = 5% x 25700 = ₹ 1285.
(4) Profit and Loss ratio = Capital ratio = 50,000: 30,000 = 5: 3.