Aashu and Ajay are partners of a firm sharing profit-loss in the equal proportion. From the following trial balance as on dated 31.3.2025 and adjustments, prepare final accounts of the firm:
Trial Balance of Partnership Firm of Aashu and Ajay as on 31.3.2025
| Particulars | Debit (₹) | Credit (₹) |
|---|---|---|
| Capital and Drawings: Aashu | 10,000 | 1,00,000 |
| Capital and Drawings: Ajay | 20,000 | 1,20,000 |
| Opening stock | 60,000 | — |
| Purchase and sales | 61,000 | 80,000 |
| Carriage inward | 20,000 | — |
| Weighing machine charges | 1,000 | — |
| Provident fund and contribution to provident fund | 1,000 | 4,000 |
| Dead stock | 22,000 | — |
| Salary-wages | 12,000 | — |
| Loan of Aashu (From 1.7.2024) | — | 20,000 |
| Mahajan lago | 2,000 | — |
| Factory building | 1,00,000 | — |
| Depreciation on factory building | 10,000 | — |
| Insurance premium | 1,200 | — |
| Prepaid insurance | 600 | — |
| Demurrage | 200 | — |
| Cash and bank | 6,000 | 18,000 |
| Bills | 30,000 | 14,000 |
| Customers and traders | 20,000 | 16,000 |
| Professional tax | 1,000 | — |
| Outstanding salary | — | 1,400 |
| Bad debts and bad debts reserve | 1,400 | 6,000 |
| Total | 3,79,400 | 3,79,400 |
Adjustments:
(1) The value of closing stock is ₹ 40,000, but market value is 20% less than the book value.
(2) Goods were received of ₹ 1,000, but invoice is not recorded in the purchase book.
(3) 10% interest on capital and 5% interest on drawings is to be calculated.
(4) Provide bad debts reserve of ₹ 3,000 and keep 10% discount reserve on debtors.
(5) Aashu has withdrawn goods of ₹ 1,000 and Ajay has withdrawn goods of ₹ 2,000 for personal use recorded in sales book as credit sales.
(6) As per partnership deed, interest on capital is payable, even if there is loss.
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Start your 14-day free trial to unlock the full solution →Gross loss 33,200, net loss 59,100; after interest on capital and drawings the loss borne by each partner is 39,800; balance sheet totals 2,03,200.
Key adjustments: Closing stock at lower of cost/market = 40,000 x 80% = 32,000. Unrecorded purchase 1,000 added to purchases and creditors. Goods withdrawn (Aashu 1,000, Ajay 2,000) wrongly booked as credit sales - reverse from sales and debtors, deduct from purchases, add to drawings. Interest on Aashu's loan @6% for 9 months (1.7.2024 to 31.3.2025) = 20,000 x 6% x 9/12 = 900 (charge). Interest on capital @10% (Aashu 10,000, Ajay 12,000, payable even in loss). Interest on drawings @5% (Aashu 500, Ajay 1,000).
Provision for doubtful debts: Old BDR 6,000 less bad debts 1,400, new BDR 3,000, discount reserve 10% on (17,000 - 3,000) = 1,400; net credit to P&L = 6,000 - 1,400 - 3,000 - 1,400 = 200 (income).
Trading Account (for the year ended 31.3.2025):
| Particulars (Dr) | Amount | Particulars (Cr) | Amount |
|---|---|---|---|
| To Opening stock | 60,000 | By Sales (80,000 - 3,000) | 77,000 |
| To Purchases (61,000 + 1,000 - 3,000) | 59,000 | By Closing stock (at market value) | 32,000 |
| To Carriage inward | 20,000 | By Gross loss c/d | 33,200 |
| To Weighing machine charges | 1,000 | ||
| To Mahajan lago | 2,000 | ||
| To Demurrage | 200 | ||
| Total | 1,42,200 | Total | 1,42,200 |
Profit & Loss Account:
| Particulars (Dr) | Amount | Particulars (Cr) | Amount |
|---|---|---|---|
| To Gross loss b/d | 33,200 | By Provision for doubtful debts (net) | 200 |
| To Salary-wages | 12,000 | By Net loss c/d | 59,100 |
| To Contribution to provident fund | 1,000 | ||
| To Insurance premium | 1,200 | ||
| To Depreciation on factory building | 10,000 | ||
| To Professional tax | 1,000 | ||
| To Interest on Aashu's loan | 900 | ||
| Total | 59,300 | Total | 59,300 |
Profit & Loss Appropriation Account:
| Particulars (Dr) | Amount | Particulars (Cr) | Amount |
|---|---|---|---|
| To Net loss b/d | 59,100 | By Interest on drawings: Aashu 500; Ajay 1,000 | 1,500 |
| To Interest on capital: Aashu 10,000; Ajay 12,000 | 22,000 | By Loss t/f to capital: Aashu 39,800; Ajay 39,800 | 79,600 |
| Total | 81,100 | Total | 81,100 |
Partners' Capital Accounts:
| Particulars | Aashu | Ajay | Particulars | Aashu | Ajay |
|---|---|---|---|---|---|
| To Drawings (cash) | 10,000 | 20,000 | By Balance b/d | 1,00,000 | 1,20,000 |
| To Drawings (goods) | 1,000 | 2,000 | By Interest on capital | 10,000 | 12,000 |
| To Interest on drawings | 500 | 1,000 | By Interest on loan (Aashu) | 900 | - |
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