2. Financial Accounting 1 Lecture – 34 Example The following trial balance was extracted from A, B & Co. books on June 30, 2002. Title of AccountDr. Rs.Cr. Rs. Building Cost750,000 Furniture and Fixtures Cost110,000 Accumulated Dep. Building250,000 Accumulated Dep. Furniture33,000 Debtors162,430 Creditors111,500 Cash at Bank6,770 Stock on Jun 30, 2002563,400 Sales1,236,500 Cost of goods Sold710,550 Carriage outward12,880 Discounts Allowed1,150

3. Financial Accounting 2 Lecture – 34 Example Title of AccountDr. Rs.Cr. Rs. Markup on Bank Loan40,000 Office Expenses24,160 Salaries and Wages189,170 Bad Debts5,030 Provision for Bad Debts4,000 Bank Loan (Long Term)400,000 Capital – A350,000 B295,000 Current Account – A13,060 B2,980 Drawings – A64,000 B56,500 2,696,040

4. Financial Accounting 3 Lecture – 34 Example Notes: Expenses to be accrued, Office Expenses Rs. 960, Wages Rs.2,000. Depreciate Fixtures 10% and Building 5% on straight line. Reduce provision for doubtful debts to Rs. 3,200 Partnership salary of A Rs. 8,000 is to be accrued. A and B share profit and loss equally.

5. Financial Accounting 4 Lecture – 34 Solution A, B, & Co Profit and Loss Account for the Year Ending June 30, 20-2 ParticularsNoteRs. Sales Less: Cost of Goods Sold (material consumed) 1,236,500 (710,550) Gross Profit Less: Expenses Wages and Salaries1 Office Expenses2 Carriage Out Discount Allowed Markup on Loan Provision for Doubtful Debt3 Depreciation4 191,170 25,120 12,880 1,150 40,000 4,230 48,500 525,950 (323,050) Net Profit202,900

6. Financial Accounting 5 Lecture – 34 Solution A, B, & Co Profit and Loss Account for the Year Ending June 30, 20-2 ParticularsNoteRs. Sales Less: Cost of Goods Sold (material consumed) 1,236,500 (710,550) Gross Profit Less: Expenses Wages and Salaries1 Office Expenses2 Carriage Out Discount Allowed Markup on Loan Bad Debts Provision for Doubtful Debts not required3(a) Depreciation4 191,170 25,120 12,880 1,150 40,000 5,030 (800) 48,500 525,950 (323,050) Net Profit202,900

7. Financial Accounting 6 Lecture – 34 Solution A, B, & Co Profit Distribution Account ParticularsNoteRs. Net Profit Less: Partner’s Salary – A 202,900 (8,000) Distributable Profit Less: Partner’s Share in Profit A (50% of 194,900) B (50% of 194,900) 97,450 194,900 (194,900) 0

8. Financial Accounting 7 Lecture – 34 Solution A, B, & Co Balance Sheet As At June 30, 2002 ParticularsNoteAmount Rs. Fixed Assets at WDV4 Current Assets5 Current Liabilities6 729,400 (114,460) 528,500 Working Capital614,940 Total1,143,440 Financed By: Capital – A B 350,000 295,000645,000 Current Account – A7 B8 54,510 43,93098,440 Long Term Loan400,000 Total1,143,440

9. Financial Accounting 8 Lecture – 34 Solution Notes (1) Salaries (2) Office Expenses Salaries and Wages Debit side. Paid 189,170 Payable 2,000 Credit side. Bal. 191,170 Office Exp. Debit side. Paid 24,160 Payable 960 Credit side. Balance 25,120

10. Financial Accounting 9 Lecture – 34 Solution Notes (3) Provision for Doubtful Debts Provision Debit side. B. Debt 5,030 Balance 3,200 Credit side. O/B 4,000 P&L A/c 4,230

11. Financial Accounting 10 Lecture – 34 Solution Notes (3-a) Provision for Doubtful Debts (4) Acc. Dep. WDV Cost RateOpening For the Yr Closing Building750,000 5%250,000 37,500 287,500 462,500 Furniture110,000 10% 33,000 11,000 44,000 66,000 48,500 528,500 Provision Debit side. Prov. not required 800 Balance 3,200 Credit side. O/B 4,000

12. Financial Accounting 11 Lecture – 34 Solution Notes (5) Current Assets Stocks563,400 Debtors162,430 Less: Provision(note3) 3,200159,230 Bank 6,770 729,400 (6) Current Liabilities Creditors111,500 Exp. Payable: Salaries 2,000 Off. Exp 960 2,960 114,460

13. Financial Accounting 12 Lecture – 34 Solution Notes (7) A’s current Account (8) B’s Current Account A’s Current A/c Debit side. Drawing 64,000 Balance 54,510 Credit side. O/B 13,060 Profit 97,450 Salary 8,000 B’s Current A/c Debit side. Drawing 56,500 Balance 43,930 Credit side. O/B 2,980 Profit 97,450

14. Financial Accounting 13 Lecture – 34 Presentation of Partners’ Accounts Partners’ Capital Account Dr. SideCr. Side ABAB Bal. On Jul 01350,000295,000 Bal. June 30 350,000295,000

15. Financial Accounting 14 Lecture – 34 Presentation of Partners’ Accounts Partners’ Current Account Dr. SideCr. Side ABAB Drawings64,00056,500Bal. On Jul 0113,0602,980 Salary8,000 Share of Profit97,450 Bal. June 3054,51043,930