Amitbhai and Narendrabhai are in Partnership sharing Profits and losses equally. from the following Trail balance and Adjustments given below, you are required to prepare Trading and Profit and Loss Account for the year ended 31st March, 2019 and Balance Sheet as on that date.

Trail Balance as on 31st march, 2019.

Debit Balance	Amount ₹	Credit Balance	Amount ₹
Plant & Machinery	2,80,000	Capital A/c:
		Amitbhai	3,50,000
		Narendrabhai	3,00,000
Factory Building	75,000	Sales	1,80,000
Sundry Debtors	28,700	Bills Payable	8,500
Purchases	85,500	Discount	1,200
Bad Debts	500	Creditors	38,500
Sales return	2,200	R.D.D.	2,700
10% Govt. Bond	40,000	Bank Loan	15,000
(Purchased on 1st Oct 2018)
Import Duty	1,800	Purchases Return	2,000
Legal Charges	2,000
Motive Power	12,000
Warehouse rent	1,800
Cash in Hand	20,000
Cash at Bank	70,000
Advertisement	10,000
(For 2-year, w.e.f 1st Jan 2019)
Salaries	3,800
Rent	1,500
Drawings:
Amitbhai	2,400
Narendrabhai	3,200
Furniture	1,95,800
Bills receivable	20,700
Free hold Property	41,000
	8,97,900		8,97,900

Adjustments: 

1. Stock on hand on 31st March 2019 was valued at ₹43,000.

2. Uninsured goods worth ₹8,000 were stolen.

3. Create R.D.D. at 2% on Sundry Debtors.

4. Mr. Patil, Our Customer become insolvent and could not pay his debts of ₹500.

5. Outstanding Expenses - Rent ₹800 and Salaries ₹300.

6. Depreciation Factory Building by ₹2,500 and Furniture by ₹1,800.

Solution:

Final Account

In the Books of Amitbhai and Narendrabhai

Dr.  Trading A/c And Profit & Loss A/c for the year ended 31st march, 2019   Cr.

Particulars	Amount	Amount	Particulars	Amount	Amount
To Purchase	85,500		By Sales	1,80,000
(-) Purchase Return	2,000	83,500	(-) Sales Return	2,200	1,77,800
To Import duty		1,800	By Goods were stolen		8,000
To Motive Power		12,000
			By Closing Stock		43,000
To Gross Profit c/d		1,31,500
		2,27,800			2,27,800

To Bad Debt          (T)	500		By Gross Profit b/d		1,31,500
(+) Bad Debt        (A)	500
(+) R.D.D.              (A)	564
	1,564
(-) R.D.D.            (T)	2,700	-1,136
To Legal Charges		2,000	By R.D.D.		1,136
To Warehouse rent		1,800	By Interest receivable		2,000
To Advertisement	10,000		By Discount		1,200
(-) Prepaid Advertisement	8,750	1,250
To Salaries	3,800
(+) Outstanding Exp	300	4,100
To Rent	1,500
(+) Outstanding Exp	800	2,300
To Depreciation:
Factory Building	2,500
Furniture	1,800	4,300
To loss on goods were stolen		8,000
To Net Profit
Amitbhai	56,043
Narendrabhai	56,043	1,12,086
		1,35,836			1,35,836

Liabilities	Amount	Amount	Assets	Amount	Amount
Capital A/c:			Plant & Machinery		2,80,000
Amitbhai       3,50,000
Narendrabhai	6,50,000
3,00,000(-) Drawings:
Amitbhai            2,400
Narendrabhai    3,200	5,600
	6,44,400
(+) Net Profit	1,12,086	5,32,314
			Factory Building	75,000
			(-) Depreciation	2,500	72,500
			10% Govt. Bond
			(Purchased on 1st Oct 2018)
			(+) Interest Receivable	40,000
				2,000	42,000
Bills Payable		8,500	Cash in Hand		20,000
Creditors		38,500	Cash at bank		70,000
Bank Loan		15,000	Furniture	1,95,800
			(-) Depreciation	1,800	1,94,000
Outstanding:			Bills Receivable		20,700
Rent	800
Salaries	300	1,100
			Free hold Property		41,000
			Debtors	28,700
			(-) Bad Debt        (A)	500
				28,200
			(-) R.D.D. @2%   (A)	564	27,636
			Prepaid Advertisement		8,750
			Closing Stock		43,000
		8,19,586			8,19,586

Explanation Of Adjustments:

Amitbhai and Narendrabhai are in Partnership

1. Stock on hand on 31st March 2019 was valued at ₹43,000.

Stock on 31st march 2019 is the end month of the year therefore stock is closing at valued ₹43,000. 1st Effect in Balance sheet Assets side And 2nd Effect in Trading A/c credit side.

2. Uninsured goods worth ₹8,000 were stolen.

Goods stolen which were uninsured, No entry for insurance claim. Stolen means a loss for the business of Amitbhai and Narendrabhai are in Partnership. 

The Loss entry in the Profit/Loss A/c Debit side And Show to the credit side of Trading A/c.

3. Create R.D.D. at 2% on Sundry Debtors.

Reserve for Doubtful debts, new R.D.D. (Provision for Doubtful Debts) Show to the debit side of Profit/Loss A/c And Deduct from Sundry Debtors Balance Sheet Asset Side.

4. Mr. Patil, Our Customer become insolvent and could not pay his debts of ₹500.

Mr. Patil Customer of Amitbhai and Narendrabhai Partnership  Business Became insolvent(unable to pay) Add to the Bad Debts of Profit/loss A/c And Deduct from the Sundry Debtors from Assets side.

5. Outstanding Expenses - Rent ₹800 and Salaries ₹300.

Outstanding Expenses are Add to the specified expense on the debit side of profit/loss A/c And Balance Sheet Liability side.

6. Depreciation Factory Building by ₹2,500 and Furniture by ₹1,800.

Depreciation of Factory Building and Furniture or any Asset effect will be same to all Assets. 1st effect show to the debit side of the Profit/Koss A/c And Less from the the Asset in Balance Sheet Asset Side.