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popularity is making its way to retails. New data indicates that ice cream marker is the
fastest growing in the world. Varsha who recently completed her mba in marketing decided
to tap on this business opportunity and decided to startup an ice cream hub in a nearby
popular locality. She was short of capital and discussed this plan with her friends Riya. She
liked the opportunity and duly agreed to be her partner. Varsha and Riya formed a
partnership firm and a partnership deed was soon drafted with the following terms and
conditions.
● Interest on capital will be provided at 6% p.a.
● Profit will be distributed in the ratio 3:2.
● Interest on drawings would be at 5% p.a.
● Varsha would receive 10% commission before charging all other adjustments.
● Interest on loan would be at 6% p.a.
1. They commenced business on 1st april 2017.each partner contributed Rs 10,00,000
as capital.
2. Furniture and fixtures of RS 1,50,000 , decoration and lighting Rs 50,000 and air
conditioners of Rs 50,000 were installed.
3. Machinery required for making and vending ice cream was installed for Rs 4,00,000
4. Two computers were also purchased for Rs 50,000.
5. Out of the total capital Rs 5000 was retained by the firm for petty expenses and the
balance amount was deposited into bank for the running of the business.
6. The following payments were made through the bank:-
Insurance 30,000
Stock 3,20,000
Sales 15,00,000
8. At the end of the year, petty cash balance in hand was Rs 2,000.
9. The actual amount of general and petty expenses amounted to Rs 25,000 and the
cash required to meet the petty expenses was withdrawn from bank. Closing stock of
consumable stores was valued at Rs 80,000.
10. Depreciation is to be charged on machinery and furniture and fittings at 5%p.a. And
on computers and air conditioners at 10% p.a.
11. Electricity expenses outstanding were Rs 15,000
12. Insurance of Rs 25,000 was prepaid and hence to be carried forward to next year.
13. During the year Rs 3,00,000 and Rs 80,000 were withdrawn by Varsha and Riya
respectively for personal use.
14. Riya advanced Rs 1,00,000 by way of loans to the firm.
Journal
Date Particulars l Dr Cr
f
2017
1 apr Bank a/c dr 19,95,000
2018
Insurance dr 30,000
Adjustment entries
( Insurance prepaid )
Ledger accounts
apr1 mar31
1,50,000 1,50,000
Decoration and lighting a/c
Date Particulars Amount Date Particulars Amount
apr1 31mar
50,000 50,000
apr1 Mar 31
50,000 50,000
Cash a/c
Date Particulars Amount Date Particulars Amount
27,000 27,000
mar31 Mar 31
3,60,000 3,60,000
Electricity expenses
Date Particulars Amount Date Particulars Amount
Mar31 Mar 31
50,000 50,000
Water expenses
Date Particulars Amount Date Particulars Amount
Mar31 Mar 31
30,000 30,000
Mar31 Mar 31
50,000 50,000
Machinery a/c
Date Particulars Amount Date Particulars Amount
Mar31 Mar 31
4,00,000 4,00,000
Computers a/c
Date Particulars Amount Date Particulars Amount
Mar31 Mar 31
50,000 50,000
Mar31 Mar 31
50,000 50,000
Purchases a/c
Date Particulars Amount Date Particulars Amount
5,00,000 5,00,000
Mar31 Mar 31
20,000 20,000
Insurance a/c
Date Particulars Amount Date Particulars Amount
Mar31 Mar 31
30,000 30,000
Mar31 Mar 31
30,000 30,000
General and petty charges a/c
Date Particulars Amount Date Particulars Amount
Mar31 Mar 31
25,000 25,000
Bank a/c
Date Particulars Amount Date Particulars Amount
2018 To Varsha’s cap a/c 10,00,000 2018 By furniture and fixtures 1,50,000
Mar31 To Riya’s cap a/c 10,00,000 Apr 1 By decoration & lighting 50,000
35,95,000 35,95,000
Sales a/c
Date Particulars Amount Date Particulars Amount
Mar31 Mar 31
15,00,000 15,00,000
Mar31 Mar 31
1,00,000 1,00,000
Riya 10,00,000
Sales 15,00,000
Computers 50,000
Machinery 4,00,000
Insurance 30,000
Purchases 5,00,000
Riya 80,000
37,80,000 37,80,000
Final accounts
Profit and loss account for the year ending 31st march 2018
Particulars Amount Particulars Amount
To salary and wages 3,60,000 By gross profit 10,60,000
To electricity expenses 65,000
(50,000+15,000)
To water expenses 30,000
To advt and pamphlet exp 50,000
To telephone charges 20,000
To internet and wifi charges 20,000
To insurance (30,000-5,000) 25,000
To dep on machinery 20,000
To depr on furn and fix 7,500
To depr on computers 5,000
To depr on air conditioner 5,000
To general & petty cash exp 25,000
To net profit 4,27,500
10,60,000 10,60,000
Profit and loss appropriation for the year ended 31st march 2018
Particulars Amount Particulars Amount
To interest on capital By Net Profit 4,27,500
Varsha - 60,000 By Interest on drawings
Riya - 60,000 1,20,000 Varsha - 5,000
To commision to Riya 31,650 Riya - 4,000 9,000
To Net Profit to partners
Varsha - 1,70,910
Riya - 1,13,940 2,84,850
4,27,500 4,27,500
Partners Capital Account