Rajan and Rohit are partners in partnership firm sharing profits and losses equally. You are required to prepare Profit and Loss Account for the year ended 31st March 2020 and Balance Sheet as on that date with the help of following information: | Trial Balance as on 31st March 2020 | | | | | --- | --- | --- | --- | | Debit Balances | Amount (₹) | Credit Balances | Amount (₹) | | Insurance | 30,000 | Capital Account: | | | Land and Building (Addition of 40,000 w.e.f. 1st July 2019) | 1,00,000 | Rajan | 1,00,000 | | Salaries | 10,000 | Rohit | 1,00,000 | | Export Duty | 5,000 | 10% Bank loan (taken on 1st October 2019) | 60,000 | | Interest | 2,000 | Bills payable | 19,000 | | Furniture | 80,000 | | | | Debtors | 52,000 | | | | | 2,79,000 | | 2,79,000 | Additional information: Gross profit amounted to ₹ 69,000. Insurance paid for 15 months w.e.f. 1st April 2019. Depreciate land and building at 10% p.a. and furniture at 5% p.a. Write off ₹ 2,000 for bad debts and maintain R.D.D. at 5% on sundry debtors. Closing stock is valued at ₹ 69,000.

Rajan and Rohit are partners in partnership firm sharing profits and losses equally. You are required to prepa

Question 33 of 42

Rajan and Rohit are partners in partnership firm sharing profits and losses equally. You are required to prepare Profit and Loss Account for the year ended 31st March 2020 and Balance Sheet as on that date with the help of following information:

Trial Balance as on 31st March 2020
Debit Balances	Amount (₹)	Credit Balances	Amount (₹)
Insurance	30,000	Capital Account:
Land and Building (Addition of 40,000 w.e.f. 1st July 2019)	1,00,000	Rajan	1,00,000
Salaries	10,000	Rohit	1,00,000
Export Duty	5,000	10% Bank loan (taken on 1st October 2019)	60,000
Interest	2,000	Bills payable	19,000
Furniture	80,000
Debtors	52,000
	2,79,000		2,79,000
Additional information:
Gross profit amounted to ₹ 69,000.
Insurance paid for 15 months w.e.f. 1st April 2019.
Depreciate land and building at 10% p.a. and furniture at 5% p.a.
Write off ₹ 2,000 for bad debts and maintain R.D.D. at 5% on sundry debtors.
Closing stock is valued at ₹ 69,000.

Maharashtra MsbshseMaharashtra HSC (MSBSHSE) Board 2025Subjective· 12mImportance★★★★★

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Adjusted expenses total ₹59,500 against Gross Profit ₹69,000, giving Net Profit ₹9,500 (₹4,750 each). Key adjustments: insurance for 15 months → ₹6,000 prepaid; loan interest due ₹3,000 (₹1,000 outstanding); depreciation L&B ₹9,000 and furniture ₹4,000; bad debts ₹2,000 and R.D.D. ₹2,500. Balance Sheet total = ₹2,89,500.

Working Note 1 — Insurance: ₹30,000 paid for 15 months from 1 April 2019. Charge for the 12 months = 30,000 × 12/15 = ₹24,000; Prepaid (3 months) = 30,000 × 3/15 = ₹6,000.

Working Note 2 — Interest on 10% Bank Loan (₹60,000 taken 1 Oct 2019, so 6 months): due = 60,000 × 10% × 6/12 = ₹3,000. Already paid (Trial Balance) ₹2,000 → outstanding interest ₹1,000.

Working Note 3 — Depreciation on Land & Building: original 60,000 for full year @10% = 6,000; addition 40,000 from 1 July 2019 (9 months) @10% = 40,000 × 10% × 9/12 = 3,000. Total dep. = ₹9,000 (L&B c/d = 1,00,000 − 9,000 = 91,000).

Working Note 4 — Depreciation on Furniture: 80,000 × 5% = ₹4,000 (Furniture c/d = 76,000).

Working Note 5 — Debtors, Bad debts and R.D.D.: Debtors 52,000 − bad debts 2,000 = 50,000; new R.D.D. @5% = ₹2,500; Debtors in Balance Sheet = 50,000 − 2,500 = ₹47,500.

Profit and Loss Account for the year ended 31 March 2020

Dr — Particulars	Amount (₹)	Cr — Particulars	Amount (₹)
To Insurance (30,000 − 6,000 prepaid)	24,000	By Gross Profit b/d	69,000
To Salaries	10,000
To Export Duty	5,000
To Interest on Bank Loan (2,000 + 1,000 o/s)	3,000
To Depreciation on Land & Building	9,000
To Depreciation on Furniture	4,000
To Bad Debts	2,000
To R.D.D. (new)	2,500
To Net Profit c/d:
Rajan 4,750
Rohit 4,750	9,500
Total	69,000	Total	69,000

Balance Sheet as on 31 March 2020

Liabilities	Amount (₹)	Assets	Amount (₹)
Capital A/c:		Land & Building (1,00,000 − 9,000)	91,000

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CBSE 2026Set ANNUAL1 mark
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CBSE 2026Set ANNUAL1 mark
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Expenses paid before their due date are called Prepaid Expenses (expenses paid in advance).

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Sales	Purchases	Gross Profit
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The missing word is Direct.

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Expense type	Where recorded	Examples
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›Reveal solutionSolution

The odd one is the Salary account.

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Item Nature Recorded in
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Royalty account Direct expense Trading A/c
Import duty account Direct expense Trading A/c
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Item	Nature	Recorded in
Wages account	Direct expense	Trading A/c
Royalty account	Direct expense	Trading A/c
Import duty account	Direct expense	Trading A/c
Salary account	Indirect expense	Profit & Loss A/c
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(d) Rent account

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The odd one is the Rent account.

Group the four items by their nature:

Item	Nature	Shown in
Machinery account	Fixed asset	Balance Sheet (Assets)
Furniture account	Fixed asset	Balance Sheet (Assets)
Computer account	Fixed asset	Balance Sheet (Assets)
Rent account	Expense (nominal)	Profit & Loss A/c
…

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CBSE 2025Set ANNUAL1 markMCQ

Q. Find the odd one:

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Group the four accounts by where they appear in the books. Three of them are liabilities/owners' claims; only Machinery account is an asset, so it is the odd one out.

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Item	Nature	Side of Balance Sheet
General Reserve account	Accumulated profit (owners' fund)	Liabilities side
Creditors account	Liability (amount owed to suppliers)	Liabilities side
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Capital account	Owners' fund	Liabilities side

Three of the four are claims against the firm's assets (liabilities and owners' funds) and appear on the liabilities side. Machinery is the only asset in the list, so it does not fit the common feature shared by the rest.

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CBSE 2024Set ANNUAL1 markMCQ
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Three of the items are assets; one is a liability. The liability is the odd one.

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Building Fixed asset Assets
Machinery Fixed asset Assets
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…

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$Q. Find the odd one:$
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(b) Creditors
(c) Investments
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Three items appear on the liabilities side of the Balance Sheet; one is an asset. The asset is the odd one.

Sorting the four items into a Balance Sheet:

Item Nature Balance Sheet side
General Reserve Accumulated profit (owners' fund) Liabilities
Creditors Current liability Liabilities
Capital Owners' fund Liabilities
Investments Asset Assets
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$Q. Write the word/phrase/term, which can substitute the following sentence. Credit balance of Profit and Loss Account.$
›Reveal solutionSolution

A credit balance in the Profit and Loss Account means the total of the credit side (incomes/gains) is greater than the debit side (expenses/losses) — the term for it is Net Profit.

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$Q. Calculate 12.5% P.A. depreciation on Furniture: on ₹ 2,20,000 for 1 year on ₹ 10,000 for 6 months$
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Charge 12.5% p.a. on each amount for its own period: ₹2,20,000 for a full year and ₹10,000 for 6 months. Total depreciation = ₹28,125.

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2,20,000 12.5% p.a. 1 year (12/12) 27,500
10,000 12.5% p.a. 6 months (6/12) 625

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The Profit & Loss Account is the account prepared to ascertain the Net Profit or Net Loss.

The question tests where the net result of a business is determined among the final accounts.

Trading Account deals only with direct items (opening/closing stock, purchases, sales, direct expenses) and gives the Gross Profit or Gross Loss.

The Profit & Loss Account then takes that gross result and adjusts all indirect expenses (salaries, rent, depreciation, etc.) and indirect incomes to arrive at the Net Profit or Net Loss. …
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Item	Nature	Balance Sheet side
Building	Fixed asset	Assets
Machinery	Fixed asset	Assets
Furniture	Fixed asset	Assets
Bills Payable	Current liability	Liabilities
…

Item	Nature	Balance Sheet side
General Reserve	Accumulated profit (owners' fund)	Liabilities
Creditors	Current liability	Liabilities
Capital	Owners' fund	Liabilities
Investments	Asset	Assets
…

Amount (₹)	Rate	Period	Depreciation (₹)
2,20,000	12.5% p.a.	1 year (12/12)	27,500
10,000	12.5% p.a.	6 months (6/12)	625

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