Question

Financial Accounting

seyati chess Example 1 Nimal, Sunil and Rohan are carrying on a business with the following agreements. A. Nimal and Rohan re to be credited with monthly salary of Rs. 5,000 and Rs. 7,500 respectively. In addition to that 5% interest should paid to the opening balance of capital accounts of each partners. 2. Drawings are made as follows: Nimal Rs. 6,250 at the start of every month, Sunil Rs 3,600 at the middles of every month and Rohan Rs. 7,500 at end of every month. Interest on drawings charged at 12% per annum. 3. Profit and loss sharing ratio among partners should be 2:2:1 The trial balance as at 31/03/2X14 was as follows: Dr Cr Capital Accounts as at 01.04.2X13 - Nimal 1,000,000 Sunil 625,000 Rohan 375,000

Answer 1

1. Income statement for the year ended 31/03/2014

Particular	Amount (in Rs.)
Income
Sales	6,160,000
Less: Sales Return	(25,000)
Interest income on investment	18,000
Total Income (A)	6,153,000
Expenses
Opening stock	525000
Purchases	3700000
Less: Closing Stock	(330000)
Salaries and wages	775,000
Carriage inwards	30,000
Office expenses	565,000
Rent & Rates	100,000
Selling & Distribution expenses	24,200
Provision for doubtfull debts	29330
Depreciation(55000+67500)	122,500
Total Expenses(B)	5541030
Net Profit(A-B)	611970
Add: Interest on Drawings	12399
Less: Interest on Capital	(100,000)
Less: Salary and wages to partner	(25,000)
Less: Transfer to General reserve	(61,197)
Profit transferred to partners current account:
Nimal	175,269
Sunit	175,268
Rohan	87,634

2. Statement of financial Position

Liabilities	Amount	Asset	Amount
Capital:		Office Equipmet	450,000
Nimal	1,000,000	Accumulated Depriciation	(230,000)
Sunil	625,000	Land	750,000
Rohan	375,000	Building	800,000
Current Account:		Accumulated Depreciation	(192500)
Nimal	355,394	Investment	200,000
Sunil	148244	Closing Stock	330,000
Rohan	133934	Advance rent	31,000
General Reserve	181197	Cash at bank	671,000
Provision for doubtfull debts	28,130	Loan to rohan	125000
Loan from nirmal	232000	Debtors	281300
Accrued Office expenses	36,000	Suspense	(100900)
Total	3114900	Total	3114900

3. Partner's current account

Particular	Nimal	Sunil	Rohan	Particular	Nimal	Sunil	Rohan
To Balance b/d		12500		By balance bd	200,000		100,000
To interest on drawings	4,875	2,574	4,950	By net profit	175269	175268	87634
To Drawings	75,000	43,200	82,500	By Salary	10,000		15,000
				By interest on capital	50,000	31,250	18,750
To balance cd	355,394	148,244	133934