Laurel and Hardy are partners of the firm LH & Co. From 1-4-2011. Initially both of them contributed $ 1,00,000 each as capital. They did not contribute any capital thereafter. They maintain accounts of the firm on mercantile basis. They were sharing profits and losses in the ratio of 5:4. After the accounts for the year ended 31-3-2015 were finalised, the partners decided to share profits and losses equally with effect from 1-4-2011. It was also discovered that in ascertaining the results in the earlier years certain adjustments, details of which are given below, had not been noted. Year ended 31s* March 2012 2013 2014 2015 $ $ $ Profit as per accounts prepared and finished 1,40,000 2,60,000 3,20,000 3,60,000 Expenses not provided for ( as 31* March) 30,000 20,000 36,000 24,000 Income not taken into account ( as at 31t* March) 18,000 15,000 12,000 21,000 Following is the Balance Sheet of the firm as on 31-3-2015 before adjustments of revised profits between Laurel and Hardy. BALANCE SHEET LH & CO. as at 31-3-2015 Liabilities Assets Capital Accounts : Laurel Hardy Sundry Creditors Plant and Machinery 2,11,500 Cash in hand 1,51,500 Cash at Bank 2,27,000 Stock in Trade Sundry Debtors 60,000 10,000 5,000 3,10,000 2,05,000 5,90,000 5,90,000 You are required to prepare (I) Profit and Loss Account; (1I1) Capital Accounts of the partners.
Laurel and Hardy are partners of the firm LH & Co. From 1-4-2011. Initially both of them contributed $ 1,00,000 each as capital. They did not contribute any capital thereafter. They maintain accounts of the firm on mercantile basis. They were sharing profits and losses in the ratio of 5:4. After the accounts for the year ended 31-3-2015 were finalised, the partners decided to share profits and losses equally with effect from 1-4-2011. It was also discovered that in ascertaining the results in the earlier years certain adjustments, details of which are given below, had not been noted. Year ended 31s* March 2012 2013 2014 2015 $ $ $ Profit as per accounts prepared and finished 1,40,000 2,60,000 3,20,000 3,60,000 Expenses not provided for ( as 31* March) 30,000 20,000 36,000 24,000 Income not taken into account ( as at 31t* March) 18,000 15,000 12,000 21,000 Following is the Balance Sheet of the firm as on 31-3-2015 before adjustments of revised profits between Laurel and Hardy. BALANCE SHEET LH & CO. as at 31-3-2015 Liabilities Assets Capital Accounts : Laurel Hardy Sundry Creditors Plant and Machinery 2,11,500 Cash in hand 1,51,500 Cash at Bank 2,27,000 Stock in Trade Sundry Debtors 60,000 10,000 5,000 3,10,000 2,05,000 5,90,000 5,90,000 You are required to prepare (I) Profit and Loss Account; (1I1) Capital Accounts of the partners.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Question
Transcribed Image Text:Laurel and Hardy are partners of the firm LH & Co. From 1-4-2011. Initially both of them contributed $
1,00,000 each as capital. They did not contribute any capital thereafter. They maintain accounts of the
firm on mercantile basis. They were sharing profits and losses in the ratio of 5:4. After the accounts for
the year ended 31-3-2015 were finalised, the partners decided to share profits and losses equally with
effect from 1-4-2011. It was also discovered that in ascertaining the results in the earlier years certain
adjustments, details of which are given below, had not been noted.
Year ended 31s* March
2012
2013
2014
2015
$
$
Profit as per accounts prepared and finished
1,40,000
2,60,000
3,20,000 3,60,000
Expenses not provided for ( as 31* March)
30,000
20,000
36,000
24,000
Income not taken into account ( as at 31t* March) 18,000
15,000
12,000
21,000
Following is the Balance Sheet of the firm as on 31-3-2015 before adjustments of revised profits
between Laurel and Hardy.
BALANCE SHEET LH & CO.
as at 31-3-2015
Liabilities
Assets
Plant and Machinery
Capital Accounts :
Laurel
Hardy
Sundry Creditors
2,11,500 Cash in hand
1,51,500 Cash at Bank
2,27,000 | Stock in Trade
Sundry Debtors
60,000
10,000
5,000
3,10,000
2,05,000
5,90,000
5,90,000
You are required to prepare (1) Profit and Loss Account; (1I) Capital Accounts of the partners.
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