Book-Keeping and Accountancy · Ch 1 — Introduction to Partnership and Partnership Final Accounts
Illustration — Complete Partnership Final Accounts
Illustration — Complete Partnership Final Accounts
This worked illustration walks through, step by step, exactly the kind of practical problem that appears in the HSC 12th Book-Keeping and Accountancy examination — from a Trial Balance and a set of adjustments, right through to a balanced Balance Sheet — using the Fluctuating Capital Method (Section 4).
Trial Balance of Ravi and Sanjay as on 31st March 2024 (Ravi and Sanjay share profits and losses in the ratio 2:1)
| Debit balances | Amount (₹) | Credit balances | Amount (₹) |
|---|---|---|---|
| Opening Stock | 20,000 | Sales | 2,00,000 |
| Purchases | 1,20,000 | Sundry Creditors | 30,000 |
| Wages | 10,000 | Capital A/c — Ravi | 50,000 |
| Salaries | 20,000 | Capital A/c — Sanjay | 25,000 |
| Rent | 8,000 | ||
| Bad Debts | 1,000 | ||
| Sundry Debtors | 50,000 | ||
| Furniture | 30,000 | ||
| Cash at Bank | 25,000 | ||
| Cash in Hand | 5,000 | ||
| Drawings — Ravi | 10,000 | ||
| Drawings — Sanjay | 6,000 | ||
| Total | 3,05,000 | Total | 3,05,000 |
Adjustments: (1) Closing Stock ₹30,000. (2) Outstanding Salaries ₹2,000. (3) Depreciate Furniture @10% p.a. (4) Maintain a Reserve for Doubtful Debts (RDD) @5% on Sundry Debtors. (5) Allow interest on capital @6% p.a. (6) Sanjay is entitled to a salary of ₹8,000 p.a. (7) Charge interest on drawings: Ravi ₹500, Sanjay ₹300.
Trading Account for the year ended 31st March 2024
| Dr. | Amount (₹) | Cr. | Amount (₹) |
|---|---|---|---|
| To Opening Stock | 20,000 | By Sales | 2,00,000 |
| To Purchases | 1,20,000 | By Closing Stock | 30,000 |
| To Wages | 10,000 | ||
| To Gross Profit c/d | 80,000 | ||
| Total | 2,30,000 | Total | 2,30,000 |
Profit and Loss Account for the year ended 31st March 2024
| Dr. | Amount (₹) | Cr. | Amount (₹) |
|---|---|---|---|
| To Salaries (20,000 + 2,000 Outstanding) | 22,000 | By Gross Profit b/d | 80,000 |
| To Rent | 8,000 | ||
| To Bad Debts (1,000 + New RDD 2,500) | 3,500 | ||
| To Depreciation on Furniture (10% of 30,000) | 3,000 | ||
| To Net Profit c/d | 43,500 | ||
| Total | 80,000 | Total | 80,000 |
Profit and Loss Appropriation Account for the year ended 31st March 2024
| Dr. | Amount (₹) | Cr. | Amount (₹) |
|---|---|---|---|
| To Interest on Capital — Ravi (6% of 50,000) | 3,000 | By Net Profit b/d | 43,500 |
| To Interest on Capital — Sanjay (6% of 25,000) | 1,500 | By Interest on Drawings — Ravi | 500 |
| To Sanjay's Salary | 8,000 | By Interest on Drawings — Sanjay | 300 |
| To Profit transferred — Ravi (2/3 of 31,800) | 21,200 | ||
| To Profit transferred — Sanjay (1/3 of 31,800) | 10,600 | ||
| Total | 44,300 | Total | 44,300 |
Partners' Capital Accounts (Fluctuating Capital Method)
| Particulars | Ravi (₹) | Sanjay (₹) | Particulars | Ravi (₹) | Sanjay (₹) |
|---|---|---|---|---|---|
| To Drawings | 10,000 | 6,000 | By Balance b/d | 50,000 | 25,000 |
| To Interest on Drawings | 500 | 300 | By Interest on Capital | 3,000 | 1,500 |
| To Balance c/d | 63,700 | 38,800 | By Salary | — | 8,000 |
| By Profit & Loss Appropriation A/c | 21,200 | 10,600 | |||
| Total | 74,200 | 45,100 | Total | 74,200 | 45,100 |
Balance Sheet as at 31st March 2024
| Liabilities | Amount (₹) | Assets | Amount (₹) |
|---|---|---|---|
| Sundry Creditors | 30,000 | Furniture (30,000 − 3,000 Depreciation) | 27,000 |