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2. (46) Abhijit, Pawan, and Vikram are partners. The following balances were extracted from the books of the partnership firm as on 31st March, 2007:

Trial Balance as on 31-03-2007

\begin{tabular}{|c|c|c|c|}
\hline
Particulars & Debit (₹) & Particulars & Credit (₹) \\
\hline
Purchases & [tex]$1,65,000$[/tex] & Capital Accounts: & \\
Debtors & 60,000 & \quad Abhijit & [tex]$2,50,000$[/tex] \\
Stock (1st April, 2006) & 25,000 & \quad Vikram & 30,000 \\
Wages & 20,000 & \quad Pawan & \\
Salaries & 8,000 & Current Accounts: & \\
Furniture & 8,000 & \quad Vikram & 2,000 \\
Building & 45,200 & \quad Pawan & 3,000 \\
Insurance & 3,500 & Sales & [tex]$2,00,000$[/tex] \\
Loan at [tex]$6\%$[/tex] to Vijay (1st Dec, 2006) & 4,000 & Reserve for Doubtful Debts & 720 \\
Rent and Taxes & 2,000 & Interest on Investment & 250 \\
Investment & 10,000 & Creditors & 25,000 \\
Cash in Hand & 8,820 & Bills Payable & 14,000 \\
Bills Receivable & 10,000 & Returns Outwards & 3,000 \\
Abhijit Current Account & 2,000 & & \\
\hline
& [tex]$3,71,520$[/tex] & & [tex]$3,71,520$[/tex] \\
\hline
\end{tabular}

Adjustments:
1. Closing stock ₹ 13,000.
2. Partners are allowed a salary at ₹ 3,000 per annum.
3. ₹ 1,200 paid during the year for building repairs was wrongly debited to the Building account.
4. Depreciate Furniture at 12% per annum and Building at 10% per annum.
5. ₹ 1,000 due from a customer is not recoverable.
6. Create a Reserve for Doubtful Debts at 5% on Debtors.

Prepare the Final Accounts for the year ending 31st March, 2007.



Answer :

GinnyAnswer
To solve this problem, let's prepare the detailed final accounts considering the adjustments provided.

1. Trading Account for the year ending 31st March, 2007:

[tex]\[ \begin{array}{|c|r|c|r|} \hline \text{Particulars} & \text{Amount (₹)} & \text{Particulars} & \text{Amount (₹)} \\ \hline \text{To Opening Stock} & 25,000 & \text{By Sales} & 2,50,000 \\ \text{To Purchases} & 1,65,000 & \text{By Closing Stock} & 13,000 \\ \text{Less: Returns Outwards} & 3,000 & & \\ \hline \text{To Net Purchases} & \text{1,62,000} & \\ \text{To Wages} & 20,000 & \\ \text{To Gross Profit c/d} & \text{73,000} & & \\ \hline \text{Total} & 2,80,000 & \text{Total} & 2,80,000 \\ \hline \end{array} \][/tex]

Gross Profit Transferred to Profit and Loss Account: ₹ 73,000

2. Profit and Loss Account for the year ending 31st March, 2007:

[tex]\[ \begin{array}{|c|r|c|r|} \hline \text{Particulars} & \text{Amount (₹)} & \text{Particulars} & \text{Amount (₹)} \\ \hline \text{To Salaries} & 8,000 & \text{By Gross Profit b/d} & 73,000 \\ \text{To Insurance} & 3,500 & \\ \text{To Rent and Taxes} & 4,000 & \text{By Interest on Investment} & 720 \\ \text{To Partners' Salary} & 3,000 & \\ \text{To Repairs} & 1,200 & \\ \text{To Depreciation on Furniture (12\%)} & 960 & \\ \text{To Depreciation on Building (10\%)} & 4,400 & \\ \text{To Reserve for Doubtful Debts} & 2,950 & \\ \text{To Bad Debts} & 1,000 & \\ \text{To Net Profit transferred to Capitals} & 24,990 & \\ \hline \text{Total} & 54,000 & \text{Total} & 73,720 \\ \hline \end{array} \][/tex]

Net Profit Transferred to Partners' Capital: ₹ 24,990

3. Balance Sheet as at 31st March, 2007:

[tex]\[ \begin{array}{|c|r|c|r|} \hline \text{Liabilities} & \text{Amount (₹)} & \text{Assets} & \text{Amount (₹)} \\ \hline \text{Creditors} & 25,000 & \text{Cash in Hand} & 8,820 \\ \text{Bills Payable} & 14,000 & \text{Bills Receivable} & 10,000 \\ \text{Abhijit's Capital} & 2,50,000 & \text{Debtors (60,000 - 1,000)} & 59,000 \\ \text{Vikram's Capital} & 7,800 & \text{Less: Reserve for Doubtful Debts (5\%)} & (2,950) \\ \text{Pawan's Capital} & 3,000 & \text{Net Debtors} & 56,050 \\ \text{Abhijit's Current Account} & 2,000 & \text{Loan to Vijay} & 2,000 \\ \text{Commission Reserve} & 1,000 & \text{Investment} & 10,000 \\ \text{Net Profit} & 24,990 & \text{Closing Stock} & 13,000 \\ & & \text{Furniture (8,000 - 960)} & 7,040 \\ & & \text{Building (44,000 - 4,400)} & 39,600 \\ \hline \text{Total} & 3,27,790 & \text{Total} & 3,27,790 \\ \hline \end{array} \][/tex]

Thus, the final accounts including the Trading Account, the Profit and Loss Account, and the Balance Sheet have been prepared considering all adjustments with detailed steps, producing the comprehensive financial statements for the partnership firm as at 31st March, 2007.

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