Nana and Nani are Partners in Partnership Firm sharing Profits and Losses equally. You are required to give effects of Adjustments in Profit & Loss A/c and Balance Sheet with the help of following information.

Trial Balance as on 31st March, 2019

Debit Balance	Amount	Credit Balance	Amount
Insurance	15,000	Capital A/c
Land and Building	50,000	Nana	50,000
(Addition of 20,000 w.e.f 1st July 2018)		Nani	50,000
Salaries	5,000	10% Bank loan taken on 1st Oct, 2018	30,000
Export Duty	2,500	Interest	1,500
Interest	1,000	Bills Payable	8,500
Furniture	40,000
Debtors	26,000
	1,39,500		1,39,500

Adjustments:

1. Gross Profit amounted to 34,500.

2. Insurance Paid for 15 months w.e.f 01/04/2018.

3. depreciation Land and Building at 10% p.a. and Furniture at 5% p.a.

4. Write off 1,000 for Bad debts and maintain R.D.D. at 5% on Sundry debtors.

5. Closing Stock is valued at 34,500.

Solution:

Final account

In the books of Nana and Nani

Profit & Loss Account for the year ended 31st march, 2019

Particulars	Amount	Amount	Particulars	Amount	Amount
To Insurance	15,000		By Gross Profit		34,500
(-) Prepaid Insurance	(3,000)	12,000
To Salaries		5,000	By Interest		1,500
To Export Duty		2,500
To Interest		1,000
To Depreciation on
Land & Building	4,500
Furniture	2,000	6,500
To Bad Debt (A)	1,000
(+) R.D.D. (A)	1,250	2,250
To Interest on Loan		1,500
To Net Profit
Nana	2,625
Nani	2,625	5,250
		36,000			36,000

Balance Sheet as on 31st March, 2019

Liabilities	Amount	Amount	Assets	Amount	Amount
Capital:			Land & Building	50,000
Nana	50,000		(-) Depreciation	(4,500)	45,500
Nani	50,000		Furniture	40,000
(+) Net Profit	5,250	1,05,250	(-) Depreciation	(2,000)	38,000
			Debtors	26,000
			(-) Bad Debts (A)	1,000
				25,000
			(-) R.D.D. (A)	1,250	23,750
10% Bank loan	30,000
(+) Interest	1,500	31,500	Prepaid Insurance		3,000
Bills Payable		8,000
			Closing Stock		34,500
		1,44,750			1,44,750