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Q. 7. Asha and Nisha are partners sharing profit and loss equally. From the following Trial Balance and adjustments, you are required to prepare Final Accounts:

Trial Balance as on [tex]$31^{\text {st }}$[/tex] March, 2019

\begin{tabular}{|l|r|l|r|}
\hline \multicolumn{1}{|c|}{Debit Balance} & \begin{tabular}{c}Amount\\₹\end{tabular} & Credit Balance & \begin{tabular}{c}Amount\\₹\end{tabular} \\
\hline Purchases & 48,000 & Capital accounts: & \\
Salaries & 7,500 & Asha & 80,000 \\
Wages & 2,800 & Nisha & 40,000 \\
Advertisement & 4,000 & Bank Overdraft & 34,000 \\
(2 years) & & Sales & 1,48,000 \\
Sales Return & 8,000 & R. D. D. & 1,200 \\
Motor Van & 63,000 & Purchase Return & 6,000 \\
Stock (1.4.2018) & 94,500 & & \\
\hline
Sundry Debtors & 62,800 & & \\
Coal, Gas and Fuel & 1,000 & & \\
Plant and Machinery & 17,600 & & \\
\hline Total & 3,09,200 & Total & 3,09,200 \\
\hline
\end{tabular}

Adjustments:
1. Closing stock is valued at cost price ₹ 88,000 and market price ₹ 90,000.
2. Asha and Nisha withdrew goods from the business ₹ 3,000 and ₹ 2,000 respectively for their personal use.
3. Depreciate Motor Van by [tex]$5\%$[/tex] and Plant and Machinery by [tex]$7\%$[/tex].
4. Reserve for Doubtful Debts on Debtors at [tex]$5\%$[/tex] is to be created.
5. Outstanding Wages ₹ 800.



Answer :

GinnyAnswer
Certainly! Let's work through the detailed solution process for the given problem step-by-step:

### Trial Balance as on 31st March 2019

| Debit Balance | Amount (₹) | Credit Balance | Amount (₹) |
| ----------------------- | ---------- | ------------------ | ---------- |
| Purchases | 48,000 | Capital: Asha | 80,000 |
| Salaries | 7,500 | Capital: Nisha | 40,000 |
| Wages | 2,800 | Bank Overdraft | 34,000 |
| Advertisement | 4,000 | Sales | 1,48,000 |
| Sales Return | 8,000 | R.D.D. | 1,200 |
| Motor Van | 63,000 | Purchase Return | 6,000 |
| Stock (1.4.2018) | 94,500 | | |
| Sundry Debtors | 62,800 | | |
| Coal, Gas, and Fuel | 1,000 | | |
| Plant and Machinery | 17,600 | | |
| | | | |
| Total Debit | 3,09,200 | Total Credit | 3,09,200 |

### Adjustments
1. Closing Stock: Valued at ₹ 88,000 (cost) and ₹ 90,000 (market).
2. Withdrawals: Asha - ₹ 3,000; Nisha - ₹ 2,000
3. Depreciation:
- Motor Van by 5%
- Plant and Machinery by 7%
4. Reserve for Doubtful Debts: 5% on Sundry Debtors.
5. Outstanding Wages: ₹ 800

### Calculations

#### 1. Depreciation
- Motor Van: [tex]\(₹ 63,000 \times 5\% = ₹ 3,150\)[/tex]
- Plant & Machinery: [tex]\(₹ 17,600 \times 7\% = ₹ 1,232\)[/tex]

#### 2. Reserve for Doubtful Debts
- Sundry Debtors: ₹ 62,800
- Reserve Needed: [tex]\(₹ 62,800 \times 5\% = ₹ 3,140\)[/tex]

#### 3. Gross Profit
- Sales: ₹ 1,48,000
- Sales Return: ₹ 8,000
- Net Sales: [tex]\(₹ 1,48,000 - ₹ 8,000 = ₹ 1,40,000\)[/tex]
- Purchases: ₹ 48,000
- Purchase Return: ₹ 6,000
- Net Purchases: [tex]\(₹ 48,000 - ₹ 6,000 = ₹ 42,000\)[/tex]
- Opening Stock: ₹ 94,500
- Closing Stock: ₹ 88,000

- Gross Profit Calculation:
[tex]\[ \text{Gross Profit} = \text{Net Sales} - \text{Net Purchases} + \text{Closing Stock} - \text{Opening Stock} \][/tex]
[tex]\[ \text{Gross Profit} = ₹ 1,40,000 - ₹ 42,000 + ₹ 88,000 - ₹ 94,500 = ₹ 91,500 \][/tex]

#### 4. Total Expenses
- Salaries: ₹ 7,500
- Wages: ₹ 2,800
- Advertisement: ₹ 4,000
- Outstanding Wages: ₹ 800
- Depreciation on Motor Van: ₹ 3,150
- Depreciation on Plant & Machinery: ₹ 1,232
- RDD (existing): ₹ 1,200

[tex]\[ \text{Total Expenses} = ₹ 7,500 + ₹ 2,800 + ₹ 4,000 + ₹ 800 + ₹ 3,150 + ₹ 1,232 + ₹ 1,200 = ₹ 20,682 \][/tex]

#### 5. Net Profit
- Gross Profit: ₹ 91,500
- Total Expenses: ₹ 20,682

[tex]\[ \text{Net Profit} = \text{Gross Profit} - \text{Total Expenses} \][/tex]
[tex]\[ \text{Net Profit} = ₹ 91,500 - ₹ 20,682 = ₹ 70,818 \][/tex]

### Final Result

- Depreciation on Motor Van: ₹ 3,150
- Depreciation on Plant & Machinery: ₹ 1,232
- New RDD: ₹ 3,140
- Gross Profit: ₹ 91,500
- Total Expenses: ₹ 20,682
- Net Profit: ₹ 70,818

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