NCERT Solutions for Class 11 Accountancy Chapter 10 - Incomplete Records
Short Answer Type Question
1. State the meaning of incomplete records ?
Ans. Accounts that are not recorded under the double entry system are known as incomplete records. According to Kohler (Dictionary of Accountants) Single Entry System is defined as, “A system of accounting in which only cash and personal accounts are kept as a rule, it is always imperfect double entry, varying according to circumstances.” Many small businesses maintain incomplete records of their transactions. They do not keep proper books of accounts and at the end of the year mainly prepare books like, Cash Book, personal accounts (of debtors and creditors) invoices and Balance Sheet. They maintain as per their needs. This system is also known as dual-nutrient system. The preparation of financial statments is neither as easier nor as effective, as it is under double entry system. Therefore, it is not possible to guarantee exact profit or loss.
2. What are the possible reasons for keeping incomplete records ?
Ans. The possible reasons for keeping incomplete records are:
(i) Simple method : Proprietors, who do not have the proper knowledge of accounting principles, find it much convenient and easier to maintain their business records under this system.
(ii) Less time consuming : Maintaining books according to the single entry system is less time consuming as only few books are to be maintained. Further, the books are not as comprehensive as they are under double entry system.
(iii) Less expensive : It is an economical mode of maintaining records, as there is no need to appoint specialised accountant.
(iv) Flexible : Owner may record transactions as per his/her own needs. It can be easily adjusted or changed whenever needed.
3. Distinguish between Statement of Affairs and Balance Sheet.
Ans.
Difference between Statement of Affairs and Balance Sheet
| Basis of Difference | Statement of Affairs | Balance Sheet |
| (i) Objective | It is prepared to determine the amount of capital at a particular date. | It is prepared to ascertaining the financial position of the business. |
| (ii) Reliability | It is treated as less reliable because it is based on incomplete records and estimates. | A Balance Sheet is treated as more reliable because it is based on double entry principles. |
| (iii) Accounting Method | It is prepared from incomplete records of business transactions under single entry system. | It is prepared when accounts are maintained under double entry system. |
| (iv) Omission | Omission of assets and liabilities cannot be easily identified. | Omission of assets and liabilities can be easily identified, as omission will lead to mismatch of either sides of the balance sheet. |
4. What practical difficulties are encountered by a trader due to incompleteness of accounting records ?
Ans. The following are the difficulties that are encountered by a trader due to incompleteness of accounting records
(i) Accuracy of accounts: Arithmetical accuracy of accounts can not be ascertained, since proper records of accounts are not maintained. Consequently, Trial Balance cannot be prepared.
(ii) Encourages fraud: As the arithmetical accuracy cannot be determined; so, this encourages fraud and provides sufficient scope for bluffing and carelessness.
(iii) Difficult to analyse the true financial position: As profit or loss cannot be ascertained easily so the the Balance Sheet cannot be easily prepared. Hence, with the absence of Balance Sheet, the business
will not reflect the true financial position.
(iv) Difficulty in comparison: Due to the incomplete records and the unavailability of previous years data, comparison is not possible.
(v) Unacceptable to tax authorities: It does not reflect the true and acceptable presentation of expenses and revenues. Hence, these are not acceptable by the tax authorities.
(vi) Raising funds: Since analysis of solvency, profitability and liquidity of business cannot be done, it is difficult to raise fund from outside.
Long Answer Type Questions
5. What is meant by a Statement of Affairs? How can the profit or loss of a trader be ascertained with the help of a statement of affairs?
Ans. A Statement of Affairs resembles Balance Sheet; however, it is not called a Balance Sheet. The statement of affairs is a Statement of Assets and Liabilities. The main difference between a Statement of Affairs and a Balance Sheet is that while the former is prepared on the basis of physical calculations faulty original documents, the latter is prepared purely on the basis of ledger accounts. Thus, the authentication
and relevance of the latter are ensured. The excess of assets over liabilities (i.e. the balancing figure) is designated as the company’s capital. The perform of the statement of affairs is presented below.
Statement of Affairs as on……
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
| Bills Payable | — | Land and Building | — |
| Creditors | — | Plant and Machinery | — |
| Outstanding Expense | Furniture | ||
| Capital (Balance Figure)* | Stock | — | |
| Debtors | — | ||
| Cash and Bank | — | ||
| Prepaid Expenses | |||
| Capital: | |||
| Deficiency (Balancing Figure, if any) |
* When liabilities are more than assets, then the balancing figure is denoted by Capital-Deficiency in the assets side of the statement of affairs. When the assets balance exceeds liabilities balance, the balancing figure is denoted by Capital in the liabilities side of the statement of affairs. For ascertaining profit or loss, if capital in the beginning is not given, then opening statement of affairs is prepared in order to calculate the capital in the beginning. Once the opening capital and closing capital is calculated, a Statement of Profit or Loss is prepared to determine the amount of profit earned or loss incurred during the accounting period.
Statement of Profit or Loss for the year
ending………
| Particulars | Amount (₹) |
| Closing capital at the end of the year | — |
| Add:Drawings made during the year | — |
| Less:Additional capital introduced during the year | — |
| Adjusted capital at the end of the year | — |
| Less: Capital in the beginning of the year | — |
| Profit (Loss) for the year | — |
| (Balancing figure) |
6. Is it possible to prepare the profit and loss account and the balance sheet from the incomplete book of accounts kept by a trader’? Do you agree? Explain.
Ans. The Profit and Loss Account and the Balance Sheet can be prepared from the incomplete book of accounts through Conversion Method. This method converts, incomplete records into duplicate or double entry records. In case of incomplete records, details of some transactions are easily available like cash sales, cash purchases, creditors, debtors; however, there are number of transactions, the details of which may not be available directly. Yet, these details can be found out indirectly or logically. Some of the important items that are vital for preparing Balance Sheet are given below.
| (i) Opening Capital | (vi) Cash Sales |
| (ii) Closing Capital | (vii) Payment from Debtors |
| (iii) Credit Purchases | (viii) Payment to Creditors |
| (iv) Cash Purchases | (ix) Opening Stock |
| (v) Credit Sales | (x) Closing Stock. |
Below given are the steps included in the conversion method in a chronological order.
(i) If opening capital is not given then the first step is to prepare opening Statement of Affairs that gives the Opening Capital.
(ii) The second step is to prepare Cash Book that gives the opening or the closing cash and bank balance.
(iii) The next step is to prepare Total Debtors Account. It is prepared in order to find out one of the missing figures, such as credit sales, opening debtors, closing debtors and cash received from debtors.
(iv) The subsequent step is to prepare Total Creditors Account to ascertain one of the missing figures, such as credit sales, opening creditors, closing creditors and cash paid to the creditors.
(v) The last step is to prepare final accounts. On the basis of the missing figures ascertained in each of the above steps, alongwith other mentioned information, Trading and Profit and Loss Account and Balance Sheet can be prepared.
7. Explain how the following may be ascertained from incomplete records:
(a) Opening capital and closing capital
(b) Credit sales and credit purchases
(c) Payments to creditors and collection from debtors
(d) Closing balance of cash.
Ans. (a) Opening capital and closing capital: Opening capital can be ascertained by preparing opening statement of affairs at the beginning of the accounting period and closing capital can be ascertained by preparing closing Statement of Affairs at the end of the accounting period.
Statement of Affairs as on….
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
| Bills Payable | — | Land and Building | — |
| Creditors | — | Machinery | — |
| Outstanding Expense | — | Furniture | — |
| Capital (Balancing Figure)* | — | Stock | — |
| Debtors | — | ||
| Cash and Bank | — | ||
| Prepaid Expenses | |||
| Capital: | |||
| Deficiency (Balancing Figure)* | |||
* When liabilities are more than assets, capital appears in assets side, as it is balancing figure.
When the assets balance exceeds liabilities balance, the balancing figure is denoted by capital in the Liabilities side of the Statement of Affairs.
(b) Credit Sales and Credit Purchases: Credit sales are ascertained as the balancing figure of the Total Debtors Account and Credit Purchases are ascertained as the balancing figure of the Total Creditors Account.
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Balance b/d | — | By Cash A/c | — |
| To Bills Receivable A/c | — | By Bank A/c | — |
| (Bills Dishonoured) | By Discount Allowed A/c | — | |
| To Bank (Cheque Dishonoured) | By Bad Debts A/c | — | |
| To Credit Sales (Balancing Figure) | — | By Sales Returns A/c | — |
| By Bills Receivable A/c | — | ||
| (Bill Drawn) | |||
| By Balance c/d | — | ||
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Cash A/c | — | By Balance b/d | — |
| To Bank A/c | — | By Bank A/c | — |
| To Bills Payable A/c | — | By (Cheque Dishonoured) | — |
| To Discount Received A/c | — | By Bills Payable (Bills Dishonoured) | — |
| To Purchases Returns A/c | — | By Credit Purchases A/c | — |
| To Balance c/d | — | By (Balancing Figure) | — |
(c) Payment to creditors and collection from debtors: Payment to the creditors are ascertained from the Total Creditors Account as a balancing figure and collection from debtors are ascertained from the Total Debtors Account as a balancing figure.
(d) Closing balance of cash: Closing balance of cash is ascertained from the Cash Book, which shows all receipts in the debit side and all payments in the credit side during an accounting year and the balancing figure of the cash book is the closing balance of cash.
Numerical Questions
8. Following information is given below prepare the statement of profit of loss:
| Particulars | Amount (₹) |
| Capital at the end of the year | 5,00,000 |
| Capital in the beginning of the year | 7,50,000 |
| Drawings made during the period | 3,75,000 |
| Additional Capital introduced | 50,000 |
Ans.
Statement of Profit and Loss
| Particulars | Amount (₹) |
| Capital at the end of the year | 5,00,000 |
| Add: Drawings made during the year | 3,75,000 |
| Less: Capital in the beginning of the year | (7,50,000) |
| Less: Additional Capital introduced | (50,000) |
| Profit made during the year | (75,000) |
9. Manveer started his business on April 01, 2016 with a capital of ₹4,50,000. On March 31, 2017 his position was as under:
| Particulars | Amount (₹) |
| Cash | 99,000 |
| Bills Receivable | 75,000 |
| Plant | 48,000 |
| Land and Building | 1,80,000 |
| Furniture | 50,000 |
He owned ₹45,000 from his friend Susheel on that date. He withdrew ₹8,000 per month for his household purposes. Ascertain his profit or loss for this year ended March 31, 2017.
Ans.
Books of Manveer
Statement of Affairs
as at 31st March, 2017
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
| Loan from Susheel | 45,000 | Cash | 99,000 |
| Closing Capital | 4,07,000 | Bills Receivable | 75,000 |
| (Balancing Figure) | Plant | 48,000 | |
| Land and Building | 1,80,000 | ||
| Furniture | 50,000 | ||
| 4,52,000 | 4,52,000 |
Statement of Profit and Loss
for the year ending March 31, 2017
| Particulars | Amount (₹) |
| Capital as on March 31, 2017 | 4,07,000 |
| Add: Drawings made during the year (₹8,000 × 12) | 96,000 |
| Less: Capital as on April 01, 2016 | 4,50,000 |
| Profit during the year 2017 | 53,000 |
10. From the information given below ascertain the profit for the year :
| Particulars | Amount (₹) |
| Capital at the beginning of the year | 70,000 |
| Additional capital introduced during the year | 17,500 |
| Stock | 59,500 |
| Sundry Debtors | 25,900 |
| Business Premises | 8,600 |
| Machinery | 2,100 |
| Sundry Creditors | 33,400 |
| Drawings made during the year | 26,400 |
Ans.
Statement of Affairs
(as at …………)
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
| Sundry Creditors | 33,400 | Stock | 59,500 |
| Capital (Balancing figure) | 62,700 | Sundry Debtors | 25,900 |
| Business Premises | 8,600 | ||
| Machinery | 2,100 | ||
| 96,100 | 96,100 |
Statement of Profit and Loss
| Particulars | Amount (₹) |
| Capital at the end of the year | 62,700 |
| Add: Drawings made during the year | 26,400 |
| Less: Capital at the beginning of the year | 70,000 |
| Less: Additional capital introduced during the year | 17,500 |
| Profit during the year | 1,600 |
11. From the following information, calculate capital at the beginning :
| Particulars | Amount (₹) |
| Capital at the end of the year | 4,00,000 |
| Add: Drawings made during the year | 60,000 |
| Fresh capital introduce during the year | 1,00,000 |
| Profit of the current year | 80,000 |
Ans. Capital in the beginning = Capital at the end + Drawings – (Fresh Capital Introduced + Profit)
= [4,00,000 + 60,000 – (1,00,000 + 80,000)] = ₹2,80,000
Note: As per the solution, the profit should be of ₹2,80,000; but, the answer given in the book is ₹2,60,000.
12. Following information is given below calculate the closing capital:
| Liabilities | April 2016 (₹) |
March 2017 (₹) |
| Creditors | 5,000 | 30,000 |
| Bills Payable | 10,000 | |
| Loan | 50,000 | |
| Bills Receivable | 30,000 | 50,000 |
| Stock | 5,000 | 30,000 |
| Cash | 2,000 | 20,000 |
Calculation of profit or loss and ascertainment of statement of affairs at the end of the year (Opening Balance is given)
Ans.
Statement of Affairs
as at April 2016
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
| Creditors | 5,000 | Bills Receivable | 30,000 |
| Bills Payable | 10,000 | Stock | 5,000 |
| Capital (Balancing figure) | 22,000 | Cash | 2,000 |
| 37,000 | 37,000 |
Statement of Affairs
as at March 2017
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
| Creditors | 30,000 | Bills Receivable | 50,000 |
| Loan | 50,000 | Stock | 30,000 |
| Capital (Balancing figure) | 20,000 | Cash | 20,000 |
| 1,00,000 | 1,00,000 |
Capital on March 31, 2017(Closing) = ₹20,000
Statement of Profit and Loss
for the year ending 31st March, 2017
| Particulars | Amount (₹) |
| Capital as on March 31, 2017 | 20,000 |
| Less: Capital on April 01, 2016 | 22,000 |
| Loss during the year 2017 | 2,000 |
13. Mrs. Anu started firm with a capital of ₹4,00,000 on 1st October 2016. She borrowed from her friends a sum of ₹1,00,000 @ 10% per annum (interest paid) for business and brought a further amount to capital ₹75,000 on March 31, 2017, her position was :
| Particulars | Amount (₹) |
| Cash | 30,000 |
| Stock | 4,70,000 |
| Debtors | 3,50,000 |
| Creditors | 3,00,000 |
He withdrew ₹8,000 per month for the year. Calculate profit or loss for the year and show your working clearly.
Books of Mrs. Anu
Statement of Affairs
as at March, 2017
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
| Creditors | 3,00,000 | Cash | 30,000 |
| 10% Loan from Friends | 1,00,000 | Stock | 4,70,000 |
| Capital (Balancing figure) | 4,50,000 | Debtors | 3,50,000 |
| 8,50,000 | 8,50,000 |
Statement of Profit and Loss
for the year ending March 31, 2017
| Particulars | Amount (₹) |
| Capital as on March, 2017 | 4,50,000 |
| Add: Drawings during the year (8,000 × 6 months) | 48,000 |
| Less: Capital as on October 01, 2016 | 4,00,000 |
| Less:Additional capital introduced | 75,000 |
| Mrs. Anu, during the year 2017 | 23,000 |
14. Mr. Arnav does not keep proper records of his business he provided following information, you are required to prepare a statement showing the profit or loss for the year.
| Particulars | Amount (₹) |
| Capital at the beginning of the year | 15,00,000 |
| Bills Receivable | 60,000 |
| Cash in hand | 80,000 |
| Furniture | 9,00,000 |
| Building | 10,00,000 |
| Creditors | 6,00,000 |
| Stock in trade | 2,00,000 |
| Further capital introduced | 3,20,000 |
| Drawing made during the period | 80,000 |
Ascertainment of statement of affairs at the beginning and at the end of the year and calculation of profit or loss.
Ans.
Books of Mr. Arnav
Statement of Affairs
at the end of year…
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
| Creditors | 6,00,000 | Bills Receivable | 60,000 |
| Capital (Balancing figure) | 16,40,000 | Cash in Hand | 80,000 |
| Furniture | 9,00,000 | ||
| Building | 10,00,000 | ||
| Stock in Trade | 2,00,000 | ||
| 22,40,000 | 22,40,000 |
Statement of Profit and Loss
for the year ended………
| Particulars | Amount (₹) |
| Capital at the end of the year | 16,40,000 |
| Add: Drawings during the year | 80,000 |
| Less: Capital at the beginning of the year | 15,00,000 |
| Less: Further capital introduced | 3,20,000 |
| Loss during the year | 1,00,000 |
15. Mr. Akshat keeps his books on incomplete records following information is given below:
| Liabilities | April 2016 (₹) |
April 2017 (₹) |
| Cash in hand | 1,000 | 1,500 |
| Cash at Bank | 15,000 | 10,000 |
| Stock | 1,00,000 | 95,000 |
| Debtors | 42,500 | 70,000 |
| Business Premises | 75,000 | 1,35,000 |
| Furniture | 9,000 | 7,500 |
| Creditors | 66,000 | 87,000 |
| Bills Payable | 44,000 | 58,000 |
During the year he withdrew ₹45,000 and introduced ₹25,000 as further capital in the business compute the profit or loss of the business.
Ans.
Books of Mr. Akshat
Statement of Affairs
as at 1st April, 2016
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
| Creditors | 66,000 | Cash in Hand | 1,000 |
| Bills Payable | 44,000 | Cash at Bank | 15,000 |
| Capital (Balancing figure) | 1,32,500 | Stock | 1,00,000 |
| Debtors | 42,500 | ||
| Business Premises | 75,000 | ||
| Furniture | 9,000 | ||
| 2,42,500 | 2,42,500 |
Statement of Affairs
as at 31st March, 2017
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
| Creditors | 87,000 | Cash in Hand | 1,500 |
| Bills Payable | 58,000 | Cash at Bank | 10,000 |
| Capital (Balancing figure) | 1,74,000 | Stock | 95,000 |
| Debtors | 70,000 | ||
| Business Premises | 1,35,000 | ||
| Furniture | 7,500 | ||
| 3,19,000 | 3,19,000 |
Statement of Profit and Loss
for the year ending 31st March, 2017
| Particulars | Amount (₹) |
| Capital as on March, 2017 | 1,74,000 |
| Add: Drawings during the year | 45,000 |
| Less: Capital as on April 01, 2016 | (1,32,500) |
| Less: Additional capital introduced | (25,000) |
| Profit earned by Mr. Akshat during the year 2016-2017 | 61,500 |
16. Gopal does not keep proper books of account. Following information is given below :
| Liabilities | April 01, 2016 (₹) |
March 31, 2017 (₹) |
| Cash in hand | 18,000 | 12,000 |
| Cash at Bank | 1,500 | 2,000 |
| Stock in trade | 80,000 | 90,000 |
| Sundry Debtors | 36,000 | 60,000 |
| Sundry Creditors | 60,000 | 40,000 |
| Loan | 10,000 | 8,000 |
| Office Equipments | 25,000 | 30,000 |
| Land and Building | 30,000 | 20,000 |
| Furniture | 10,000 | 10,000 |
During the year he introduced ₹20,000 and withdrew ₹12,000 from the business. Prepare the statement of profit or loss on the basis of given information.
Books of Gopal
Statement of Affairs
as at April 01, 2016
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
| Sundry Creditors | 60,000 | Cash in Hand | 18,000 |
| Loan | 10,000 | Cash at Bank | 1,500 |
| Capital (Balancing figure) | 1,30,500 | Stock in trade | 80,000 |
| Sundry Debtors | 36,000 | ||
| Office Equipments | 25,000 | ||
| Land and Buildings | 30,000 | ||
| Furniture | 10,000 | ||
| 2,00,500 | 2,00,500 |
Statement of Affairs
as at 31st March, 2017
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
| Sundry Creditors | 40,000 | Cash in Hand | 12,000 |
| Loan | 8,000 | Cash at Bank | 2,000 |
| Capital (Balancing figure) | 1,76,000 | Stock in Trade | 90,000 |
| Sundry Debtors | 60,000 | ||
| Office Equipments | 30,000 | ||
| Land and Buildings | 20,000 | ||
| Furniture | 10,000 | ||
| 2,24,000 | 2,24,000 |
Statement of Profit and Loss
for the year ending March, 2017
| Particulars | Amount (₹) |
| Capital as on March 31, 2017 | 1,76,000 |
| Add: Drawings made during, 2017 | 12,000 |
| Less: Capital as on April 01, 2016 | (1,30,500) |
| Less:Additional capital introduced | (20,000) |
| Profit during the year | 37,500 |
Note: As per the solution, the profit during the year should be ₹37,500; whereas, the profit given in the book is ₹53,500.
17. Mr. Muneesh maintains his books of accounts from incomplete records. His books provide the information:
| April 2016 (₹) |
April 2017 (₹) |
|
| Cash | 1,200 | 1,600 |
| Bills Receivable | — | 2,400 |
| Debtors | 16,800 | 27,200 |
| Stock | 22,400 | 24,400 |
| Investments | — | 8,000 |
| Furniture | 7,500 | 8,000 |
| Creditors | 14,000 | 15,200 |
He withdrew ₹300 per month for personal expenses. He sold his investment of ₹16,000 at 2% premium and introduced that amount into business.
Ans.
Statement of Affairs
as at 01st April, 2016
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
| Creditors | 14,000 | Cash | 1,200 |
| Capital (Balancing figure) | 33,900 | Debtors | 16,800 |
| Stock | 22,400 | ||
| Furniture | 7,500 | ||
| 47,900 | 47,900 |
Statement of Profit and Loss
for the year ending 31st March, 2017
| Particulars | Amount (₹) |
| Capital as on March 31, 2017 | 56,400 |
| Add: Drawings made during the year 2017 (300 × 12) | 3,600 |
| Less: Capital as on April 01, 2016 | (33,900) |
| Less: Additional capital introduced (16,000 + 2% of 16,000) | (16,320) |
| Profit during the year | 9,780 |
Statement of Affairs
as at 31st March, 2017
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
| Creditors | 15,200 | Cash | 1,600 |
| Capital (Balancing figure) | 56,400 | Bills Receivable | 2,400 |
| Debtors | 27,200 | ||
| Stock | 24,400 | ||
| Investment | 8,000 | ||
| Furniture | 8,000 | ||
| 71,600 | 71,600 |
18. Mr. Girdhari Lal does not keep full double entry records. His balance as on January 01, 2016 is as.
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
| Sundry Creditors | 35,000 | Cash in hand | 5,000 |
| Bills Payable | 15,000 | Cash at bank | 20,000 |
| Capital | 40,000 | Sundry Debtors | 18,000 |
| Stock | 22,000 | ||
| Furniture | 8,000 | ||
| Plant | 17,000 | ||
| 90,000 | 90,000 |
His position at the end of the year is:
| Particulars | Amount (₹) |
| Cash in hand | 7,000 |
| Stock | 8,600 |
| Debtors | 23,800 |
| Furniture | 15,000 |
| Plant | 20,350 |
| Bills Payable | 20,200 |
| Creditors | 15,000 |
He withdrew ₹500 per month, out of which he spent ₹1,500 for business purpose. Prepare the statement of profit or loss.
Ans.
Books of Mr. Girdhari Lal
Statement of Affairs
as at 31st March, 2017
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
| Bills Payable | 20,200 | Cash in Hand | 7,000 |
| Creditors | 15,000 | Stock | 8,600 |
| Capital (Balancing figure) | 39,550 | Debtors | 23,800 |
| Furniture | 15,000 | ||
| Plant | 20,350 | ||
| 74,750 | 74,750 |
Statement of Profit and Loss
for the year ending 31st March, 2017
| Amount (₹) |
|
| Capital at the end of the year | 39,550 |
| Add: Drawings (₹500 × 12 months) | 6,000 |
| Less: Capital at the beginning of the year 2016 | (40,000) |
| Less: Additional capital introduced | (1,500) |
| Profit earned during the year 2017 | 4,050 |
19. Mr. Ashok does not keep his books properly. Following information is available from his books.
| Liabilities | April 2016 (₹) |
March 2017 (₹) |
| Sundry Creditors | 45,000 | 93,000 |
| Loan from Wife | 66,000 | 57,000 |
| Sundry Debtors | 22,500 | — |
| Land and Building | 89,600 | 90,000 |
| Cash in hand | 7,500 | 8,700 |
| Bank Overdraft | 25,000 | — |
| Furniture | 1,300 | 1,300 |
| Stock | 34,000 | 25,000 |
During the year Mr. Ashok sold his private car for ₹50,000 and invested this amount into the business. He withdrew from the business ₹1,500 per month upto October 31, 2016 and thereafter ₹4,500 per month as drawings. You are required to prepare the statement of profit or loss and statement of affair as on March 31, 2017.
Ans.
Books of Mr. Ashok
Statement of Affairs
as at 01st April, 2016
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
| Sundry Creditors | 45,000 | Sundry Debtors | 22,500 |
| Loan from Wife | 66,000 | Land and Building | 89,600 |
| Bank Overdraft | 25,000 | Cash in Hand | 7,500 |
| Capital (Balancing figure) | 18,900 | Furniture | 1,300 |
| Stock | 34,000 | ||
| 1,54,900 | 1,54,900 |
Statement of Affairs as at March, 2017
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
| Sundry Creditors | 93,000 | Land and Building | 90,000 |
| Loan from Wife | 57,000 | Cash in Hand | 8,700 |
| Furniture | 1,300 | ||
| Stock | 25,000 | ||
| Capital (Balancing figure) | 25,000 | ||
| 1,50,000 | 1,50,000 |
Statement of Profit and Loss
for the year ending 31st March, 2017
| Particulars | Amount (₹) |
| Capital as on March 31, 2017 | 25,000 |
| Add: Drawings (₹1,500 × 7 months) + (₹4,500 × 5 months) | 33,000 |
| Less: Capital as on April 01, 2016 | (18,900) |
| Less: Additional capital introduced (sale of car) | (50,000) |
| Loss during the year 2017 | (60,900) |
Note: As per the solution, the loss incurred during the year 2011 is ₹60,900; while the answer given in the book shows ₹57,900.
20. Krishna Kulkarni has not kept proper books of accounts, prepare the statement of profit or loss for the year ending March 31, 2016 from the following information:
| April 01, 2016 (₹) |
March 31, 2017 (₹) |
|
| Cash in hand | 10,000 | 36,000 |
| Debtors | 20,000 | 80,000 |
| Creditors | 10,000 | 46,000 |
| Bills Receivable | 20,000 | 24,000 |
| Bills Payable | 4,000 | 42,000 |
| Car | — | 80,000 |
| Stock | 40,000 | 30,000 |
| Furniture | 8,000 | 48,000 |
| Investment | 40,000 | 50,000 |
| Bank balance | 1,00,000 | 90,000 |
The following adjustments were made:
(a) Krishna withdrew cash ₹5,000 per month for private use.
(b) Depreciation @ 5% on car and furniture @10%.
(c) Outstanding Rent ₹6,000.
(d) Fresh Capital introduced during the year ₹30,000.
Ans.
Books of Krishna Kulkarni
Statement of Affair’s
as at 01st April, 2016
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
| Creditors | 10,000 | Cash in Hand | 10,000 |
| Bills Payable | 4,000 | Debtors | 20,000 |
| Capital (Balancing figure) | 2,24,000 | Bills Receivable | 20,000 |
| Stock | 40,000 | ||
| Furniture | 8,000 | ||
| Investment | 40,000 | ||
| Cash at Bank | 1,00,000 | ||
| 2,38,000 | 2,38,000 |
Statement of Affair’s
as at 31st March, 2017
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Creditors | 46,000 | Cash in Hand | 36,000 | |
| Bills Payable | 42,000 | Debtors | 80,000 | |
| Outstanding Expenses | 6,000 | Bills Receivable | 24,000 | |
| Capital (Balancing figure) | 3,35,200 | Car | 80,000 | |
| Less: Depreciation 5% | (4,000) |
76,000 | ||
| Stock | 30,000 | |||
| Furniture | 48,000 | |||
| Less: Depreciation 10% | (4,800) |
43,200 | ||
| Investment | 50,000 | |||
| Cash at Bank | 90,000 | |||
| 4,29,200 | 4,29,200 | |||
Statement of Profit and Loss
for the year ending 31st March, 2017
| Particulars | Amount (₹) |
| Capital as on March 31, 2017 | 3,35,200 |
| Add: Drawings made during the year (₹5,000 × 12 months) | 60,000 |
| Less: Capital as on April 01, 2016 | (2,24,000) |
| Less: Fresh capital introduced during the year 2017 | (30,000) |
| Profit earned during the year 2017 | 1,41,200 |
| March 31, 2016 (₹) |
March 31, 2017 (₹) |
|
| Cash in hand | 6,000 | 24,000 |
| Bank Overdraft | 30,000 | — |
| Stock | 50,000 | 80,000 |
| Sundry Creditors | 26,000 | 40,000 |
| Bills Payable | 6,000 | 12,000 |
| Furniture | 40,000 | 60,000 |
| Bills Receivable | 8,000 | 28,000 |
| Machinery | 50,000 | 1,00,000 |
| Investment | 30,000 | 80,000 |
Drawings ₹10,000 p.m. for personal use, fresh capital introduce during the year ₹2,00,000. A bad debts of ₹2,000 and a provision of 5% is to be made on debtors outstanding, salary ₹2,400, prepaid insurance ₹700, depreciation charged on furniture and machine @ 10% p.a.
Ans.
Statement of Affair’s
as at 31st March, 2016
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
| Bank Overdraft | 30,000 | Cash in Hand | 6,000 |
| Sundry Creditors | 26,000 | Stock | 50,000 |
| Bills Payable | 6,000 | Sundry Debtors | 60,000 |
| Capital (Balancing figure) | 1,82,000 | Furniture | 40,000 |
| Bills Receivable | 8,000 | ||
| Machinery | 50,000 | ||
| Investment | 30,000 | ||
| 2,44,000 | 2,44,000 |
Statement of Affairs
as at 31st March, 2017
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Sundry Creditors | 40,000 | Cash in Hand | 24,000 | |
| Bills Payable | 12,000 | Stock | 80,000 | |
| Outstanding Salary | 2,400 | Sundry Debtors | 1,40,000 | |
| Capital (Balancing figure) | 4,33,400 | Less: Bad debts | (2,000) |
|
| 1,38,000 | ||||
| Less: 5% Provision | (6,900) | 1,31,100 | ||
| Furniture | 60,000 | |||
| Less: Depreciation | (6,000) |
54,000 | ||
| Bills Receivable | 28,000 | |||
| Machinery | 1,00,000 | |||
| Less: Depreciation | (10,000) |
90,000 | ||
| Investment | 80,000 | |||
| Prepaid Insurance | 700 | |||
| 4,87,800 | 4,87,800 | |||
Statement of Profit and Loss
for the year ending 31st March, 2017
| Particulars | Amount (₹) |
| Capital as on March 31, 2017 | 4,33,400 |
| Add: Drawings made during the year (₹10,000 × 12) | 1,20,000 |
| Less: Capital as on March 31, 2016 | (1,82,000) |
| Less: Fresh capital introduced during the year 2017 | (2,00,000) |
| Profit earned during the year 2017 | 1,71,400 |
Note: As per the solution, the profit earned during the year is ₹1,71,400 while, according to the book, the answer is ₹1,71,300.
In order to match our answer with NCERT, the treatment of provision will be made as,
| Particulars | Amount (₹) |
| Debtors | 1,40,000 |
| Less: Bad Debts | (7,000) |
| 1,33,000 | |
| Less: Bad-debts | (2,000) |
| Debtors | 1,31,100 |
However, as per the rule, the treatment of provision will be calculated as,
| Particulars | Amount (₹) |
| Debtors | 1,40,000 |
| Less: 5% Provision | (2,000) |
| 1,38,000 | |
| Less: 5% Provision | (6,900) |
| Debtors | 1,31,000 |
22. From the following information calculate the amount to be paid to creditors:
| Particulars | Amount (₹) |
| Sundry creditors as on 31st March, 2017 | 1,80,425 |
| Discount received | 26,000 |
| Discount allowed | 24,000 |
| Return outwards | 37,200 |
| Return inward | 32,200 |
| Bills accepted | 1,99,000 |
| Bills endorsed to creditors | 26,000 |
| Creditors as on 01stApril, 2016 | 2,09,050 |
| Total purchases | 8,97,000 |
| Cash purchases | 1,40,000 |
Ans.
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Discount Received | 26,000 | By Balance b/d | 2,09,050 |
| To Return Outwards | 37,200 | By Purchases (credit) | |
| To Bills accepted | 1,99,000 | (8,97,000 – 1,40,000) | 7,57,000 |
| To B/R (endorsed to creditors) | 26,000 | ||
| To Balance c/d | 1,80,425 | ||
| To Cash Bank (Balancing figure) | 4,97,425 | ||
| 9,66,050 | 9,66,050 |
Note: As per the solution, the balancing figure is ₹4,97,425, while, according to the book, the answer is ₹4,40,175. The difference is because of opening and closing balance, which is considered wrong as per the answer.
23. Find out the credit purchases from the following :
| Particulars | Amount (₹) |
| Balance of creditors 01st April, 2016 | 45,000 |
| Balance of creditors 01st April, 2017 | 36,000 |
| Cash paid to creditors | 1,80,000 |
| Cheque issued to creditors | 60,000 |
| Cash purchases | 75,000 |
| Discount received from creditors | 5,400 |
| Discount allowed | 5,000 |
| Bills payable given to creditors | 12,750 |
| Return outwards | 7,500 |
| Bills payable dishonoured | 3,000 |
| Bills receivable endorsed to creditors | 4,500 |
| Bills receivable endorsed to creditors dishonoured | 1,800 |
| Return inwards | 3,700 |
Ans.
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Cash | 1,80,000 | By Balance b/d | 45,000 |
| To Bank | 60,000 | By B/P (dishonoured) | 3,000 |
| To Discount Received | 5,400 | By B/R (dishonoured) | 1,800 |
| To B/P (accepted) | 12,750 | By Purchases-credit | |
| To Return outwards | 7,500 | (Balancing figure) | 2,56,350 |
| To B/R (endorsed to creditors) | 4,500 | ||
| To Balance c/d | 36,000 | ||
| 3,06,150 | 3,06,150 |
Credit Purchases = ₹2,56,350
24. From the following information calculate total purchases.
| Particulars | Amount (₹) |
| Creditors April 01, 2016 | 30,000 |
| Creditors March 31, 2017 | 20,000 |
| Opening balance of Bills payable | 25,000 |
| Closing balance of Bills payable | 35,000 |
| Cash paid to creditors | 1,51,000 |
| Bills discharged | 44,500 |
| Cash purchases | 1,29,000 |
| Return outwards | 6,000 |
Ans.
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Cash | 1,51,000 | By Balance b/d | 30,000 |
| To Return Outwards | 6,000 | By Purchases-credit | 2,01,500 |
| To Bills Payable (working notes) | 54,500 | (Balancing figure) | |
| To Balance c/d | 20,000 | ||
| 2,31,500 | 2,31,500 |
Working Note:
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Cash (Bills Discharged) | 44,500 | By Balance b/d | 25,000 |
| To Balance c/d | 35,000 | By Creditors—(Bills Payable Accepted) | 54,500 |
| (Balancing figure) | |||
| 79,500 | 79,500 |
Total Purchase = Cash Purchases + Credit Purchases (as per Creditors Account)
= 1,29,000 + 2,01,500 = ₹3,30,500
25. The following information is given:
| Particulars | Amount (₹) |
| Opening creditors | 60,000 |
| Cash paid to creditors | 30,000 |
| Closing creditors | 36,000 |
| Returns Inward | 13,000 |
| Bills matured | 27,000 |
| Bills dishonoured | 8,000 |
| Purchases return | 12,000 |
| Discount allowed | 5,000 |
Calculate credit purchases during the year.
Ans.
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Cash | 30,000 | By Balance b/d | 60,000 |
| To Purchases Return | 12,000 | By B/P (dishonoured) | 8,000 |
| To B/P (Accepted) (see note) | 27,000 | By Purchases-credit | 37,000 |
| To Balance c/d | 36,000 | (Balancing figure) | |
| 1,05,000 | 1,05,000 |
Note: In order to match the answer with NCERT book, in the solution bills payable matured has been assumed as bills payable accepted.
26. From the following, calculate the amount of bills accepted during the year.
| (₹) | |
| Bills payable as on April 01, 2016 | 1,80,000 |
| Bills payable as on March 31, 2017 | 2,20,000 |
| Bills payable dishonoured during the year | 28,000 |
| Bills payable honoured during the year | 50,000 |
Ans.
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Creditors (dishonoured) | 28,000 | By Balance b/d | 1,80,000 |
| To Cash / Bank | 50,000 | By Creditors (acceptance) | 1,18,000 |
| To Balance c/d | 2,20,000 | (Balancing figure) | |
| 2,98,000 | 2,98,000 |
27. Find out the amount of bills matured during the year on the basis of information given below :
| Particulars | Amount (₹) |
| Bills payable dishonoured | 37,000 |
| Closing balance of Bills payable | 85,000 |
| Opening balance of Bills payable | 70,000 |
| Bills payable accepted | 90,000 |
| Cheque dishonoured | 23,000 |
Ans.
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Creditors (Bill dishonoured) | 37,000 | By Balance b/d | 70,000 |
| To Cash / Bank (Balancing figure) | 38,000 | By Creditors (acceptance) | 90,000 |
| To Balance c/d | 85,000 | (Balancing figure) | |
| 1,60,000 | 1,60,000 |
Bills Payable matured during the year is ₹38,000.
28. Prepare the bills payable account from the following and find out missing figure if any :
| Particulars | Amount (₹) |
| Bills accepted | 1,05,000 |
| Discount received | 17,000 |
| Sales returns | 9,000 |
| Return inwards | 12,000 |
| Cash paid to accounts payable | 50,000 |
| Bills receivable endorsed to creditors | 45,000 |
| Bills dishonoured | 17,000 |
| Bad debts | 14,000 |
| Balance of accounts payable (closing) | 85,000 |
| Credit purchases | 2,15,000 |
Ans.
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Creditors (Dishonoured) | 17,000 | By Creditors (acceptance) | 1,05,000 |
| To Cash / Bank (Balancing figure) | 88,000 | (Balancing figure) | |
| 1,05,000 | 1,05,000 |
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Discount Received | 17,000 | By Purchases-Credit | 2,15,000 |
| To Purchases Return | 9,000 | By B/P (dishonoured) | 17,000 |
| To Cash | 50,000 | By Balance b/d | 79,000 |
| To B/R (endorsed) | 45,000 | (Balancing figure) | |
| To B/P (acceptance) | 1,05,000 | ||
| To Balance c/d | 85,000 | ||
| 3,11,000 | 3,11,000 |
Bills payable discharged is ₹88,000 and the opening balance of creditors is ₹79,000.
29. Calculate the amount of bills receivable during the year.
| Particulars | Amount (₹) |
| Opening balance of bills receivable | 75,000 |
| Bills dishonoured | 25,000 |
| Bills collected (honoured) | 1,30,000 |
| Bills receivable endorsed to creditors | 15,000 |
| Closing balance of bills receivable | 65,000 |
| Bills receivable received | 1,50,000 |
Ans.
| Dr. | Cr. | ||
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Balance b/d | 75,000 | By Bills dishonoured | 25,000 |
| To Debtors | 1,60,000 | By Bills collected (honoured) | 1,30,000 |
| (Balancing figure) | By Bills receivable endorsed to creditors) | 15,000 | |
| By Balance c/d | 65,000 | ||
| 2,55,000 | 2,55,000 | ||
30. Calculate the amount of bills receivable dishonoured from the following information:
| ₹ | |
| Opening balance of bills receivable | 1,20,000 |
| Bills collected (honoured) | 1,85,000 |
| Bills receivable endorsed | 22,800 |
| Closing balance of bills receivable | 50,700 |
| Bills receivable received | 1,50,000 |
Ans.
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Balance b/d | 1,20,000 | By Bills collected (Cash/Bank) | 1,85,000 |
| To Debtors | 1,50,000 | (honoured) | |
| (B/R received) | By Bills receivable endorsed (creditors) | 22,800 | |
| By Balance c/d | 50,700 | ||
| By Debtors (dishonoured) | 11,500 | ||
| (Balaning figure) | |||
| 2,70,000 | 2,70,000 |
Therefore, the Bills Receivable dishonoured is ₹11,500.
31. From the details given below, find out the credit sales and total sales:
| (₹) | |
| Opening debtors | 45,000 |
| Closing debtors | 56,000 |
| Discount allowed | 2,500 |
| Sales returns | 8,500 |
| Irrecoverable amount | 4,000 |
| Bills receivable received | 12,000 |
| Bills receivable dishonoured | 3,000 |
| Cheque dishonoured | 7,700 |
| Cash sales | 80,000 |
| Cash received from debtors | 2,30,000 |
| Cheque received from debtors | 25,000 |
Ans.
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Balance b/d | 45,000 | By Discount allowed | 2,500 |
| To B/R (dishonoured) | 3,000 | By Sales Return | 8,500 |
| To Bank A/c (cheque dishonoured) | 7,700 | By Bad debts (irrecoverable amount) | 4,000 |
| To Sales-credit | 2,82,300 | By B/R (received) | 12,000 |
| (Balancing figure) | By Cash A/c | 2,30,000 | |
| By Bank A/c | 25,000 | ||
| By Balance c/d | 50,000 | ||
| 3,38,000 | 3,38,000 |
Credit sales is ₹2,82,300
Total sales = Cash sales + Credit sales
= 80,000 + 2,82,300 = ₹3,62,300
32. From the following information, prepare the bills receivable account and total debtors account for the year ended March, 31, 2017.
| ₹ | |
| Opening balance of debtors | 1,80,000 |
| Opening balance of bills receivable | 55,000 |
| Cash sales made during the year | 95,000 |
| Credit sales made during the year | 14,50,000 |
| Return inwards | 78,000 |
| Cash received from debtors | 10,25,000 |
| Discount allowed to debtors | 55,000 |
| Bills receivable endorsed to creditors | 60,000 |
| Cash received (bills matured) | 80,500 |
| Irrecoverable amount | 10,000 |
| Closing balance of bills receivable on March 31, 2017 | 75,500 |
Ans.
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Balance b/d | 1,80,000 | By Return Inwards | 78,000 |
| To Sales credit | 14,50,000 | By Discount allowed | 55,000 |
| By Cash A/c | 10,25,000 | ||
| By Bad Debt (irrecoverable amount) | 10,000 | ||
| By B/R (received) | 1,61,000 | ||
| By Balance c/d | 3,01,000 | ||
| (Balancing figure) | |||
| 16,30,000 | 16,30,000 |
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Balance b/d | 55,000 | By Cash (Bills matured) | 80,500 |
| To Debtors (received) | 1,61,000 | By Creditors (endorsed) | 60,000 |
| (Balancing figure) | By Balance c/d | 75,500 | |
| 2,16,000 | 2,16,000 |
The missing figure in the bills receivable account B/R received from debtors is ₹1,61,000 and the missing figure in the debtor account -Closing balance is ₹3,01,000.
33. Prepare the suitable accounts and find out the missing figure of any
| ₹ | |
| Opening balance of debtors | 14,00,000 |
| Opening balance of bills receivable | 7,00,000 |
| Closing balance of bills receivable | 3,50,000 |
| Cheque dishonoured | 27,000 |
| Cash received from debtors | 10,75,000 |
| Cheque received and deposited in the bank | 8,25,000 |
| Discount allowed | 37,500 |
| Irrecoverable amount | 17,500 |
| Returns inwards | 28,000 |
| Bills receivable received from customers | 1,05,000 |
| Bills receivable matured | 2,80,000 |
| Bills discounted | 65,000 |
| Bills endorsed to creditors | 70,000 |
Ans.
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Balance b/d | 14,00,000 | By Cash | 10,75,000 |
| To Bank (Cheque Dishonoured) | 27,000 | By Bank | 8,25,000 |
| To B/R (Dishonoured) | 40,000 | By Discount allowed | 37,500 |
| To Sales credit (Balancing Figure) | 6,21,000 | By Bad debt (Irrecoverable Amount) | 17,500 |
| By Return Inwards | 28,000 | ||
| By B/R (Received) | 1,05,000 | ||
| 20,88,000 | 20,88,000 |
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Balance b/d | 7,00,000 | By Cash (B/R matured) | 4,80,000 |
| To Debtors (B/R received) | 1,05,000 | By Bank (Bill endorsed) | 65,000 |
| By Creditor (endorsed) | 70,000 | ||
| By Balance c/d | 3,50,000 | ||
| By Debtors (dishonoured) | 40,000 | ||
| (Balancing figure) | |||
| 8,05,000 | 8,05,000 |
Note: As per the solution, the balancing figure is ₹6,21,000, while according to the book, the answer is ₹5,16,000.
34. From the following information ascertain the opening balance of sundry debtors and closing balance of sundry creditors :
| Particulars | (₹) |
| Opening stock | 30,000 |
| Closing stock | 25,000 |
| Opening creditors | 50,000 |
| Closing debtors | 75,000 |
| Discount allowed by creditors | 1,500 |
| Discount allowed to customers | 2,500 |
| Cash paid to creditors | 1,35,000 |
| Bills payable accepted during the period | 30,000 |
| Bills receivable received during the period | 75,000 |
| Cash received from customers | 2,20,000 |
| Bills receivable dishonoured | 3,500 |
| Purchases | 2,95,000 |
The rate of gross profit is 25% on selling price and out of the total sales ₹85,000 was for cash sales.
Ans.
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Balance b/d (Balancing figure) | 54,000 | By Discount allowed | 2,500 |
| To B/R (dishonoured) | 3,500 | By B/R (received) | 75,000 |
| To Sales Credit | 3,15,000 | By Cash A/c | 2,20,000 |
| By Balance c/d | 75,000 | ||
| 3,72,000 | 3,72,000 |
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Discount received | 1,500 | By Balance b/d | 50,000 |
| To Cash | 1,35,000 | By Purchase credit | 2,95,000 |
| To B/P (accepted) | 30,000 | ||
| To Balance c/d (Balancing figure) | 1,78,000 | ||
| 3,45,500 | 3,45,500 |
Working Notes:
Total sales = Cash Sales + Credit Sales
= Cost of goods sold + Gross profit
Cost of goods sold = Opening stock + Purchases – Closing stock
= 80,000 + 2,95,000 – 25,000 = ₹3,00,000
Let us assume the sales to be 100%
Sales = Cost of goods sold + Gross profit
Then 100% = Cost of goods sold + 25%
Cost of goods sold = 100 – 25% = 75%
$$\text{Gross Profit =}\frac{\text{Cost of good sold}}{\%\space \text{of Cost of goods sold}}\\×\space\%\space\text{of gross profit}\\=\frac{3,00,000}{75}×25 \\= ₹1,00,000$$
Sales = Cost of goods sold + Gross Profit
= 3,00,000 + 1,00,000 = ₹4,00,000
Total Sales = Cash Sales + Credit Sales
Or 4,00,000 = 85,000 + Credit Sales
Or Credit Sales = ₹3,15,000
Note: It is assumed that all purchaces are made in credit.
35. Mrs. Bhavana keeps his books by Single Entry System. You are required to prepare final accounts of her business for the year ended March 31, 2017. Her records relating to cash receipts and cash payments for the above period showed the following particulars:
| Dr. | Cr. |
| Receives | Amount (₹) |
Payments | Amount (₹) |
| Opening balance of cash | 12,000 | Paid to creditors | 53,000 |
| Further capital | 20,000 | Business expenses | 12,000 |
| Received from debtors | 1,20,000 | Wage paid | 30,000 |
| Bhavana’s drawings | 15,000 | ||
| Balance at Bank on March 31, 2017 | 35,000 | ||
| Cash in hand | 7,000 | ||
| 1,52,000 | 1,52,000 |
The following information is also available:
| April 01, 2016 (₹) |
March 31, 2017 (₹) |
|
| Debtors | 55,000 | 85,000 |
| Creditors | 22,000 | 29,000 |
| Stock | 35,000 | 70,000 |
| Plant | 10,00,000 | 1,00,000 |
| Machinery | 50,000 | 50,000 |
| Land and Building | 2,50,000 | 2,50,000 |
| Investment | 20,000 | 20,000 |
All her sales and purchases were on credit. Provide depreciation on plant and building by 10% and machinery by 5%, make a provision for bad debts by 5%.
Ans.
Books of Mrs. Bhavana
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Balance b/d | 55,000 | By Cash | 1,20,000 |
| To Sales-credit | 1,50,000 | By Balance c/d | 85,000 |
| 2,05,000 | 2,05,000 |
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Cash | 53,000 | By Balance b/d | 22,000 |
| To Balance c/d | 29,000 | By Purchases-credit | 60,000 |
| 82,000 | 82,000 |
Statement of Affairs
as on 01st April, 2016
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
| Creditors | 22,000 | Debtors | 55,000 |
| Capital | 5,00,000 | Stock | 35,000 |
| Opening | Plant | 1,00,000 | |
| (Balancing figure) | Machinery | 50,000 | |
| Land & Building | 2,50,000 | ||
| Investment | 20,000 | ||
| Cash | 12,000 | ||
| 5,22,000 | 5,22,000 |
Plant of ₹1,00,000 has been taken into the statment of affairs on 01st April, 2016, instead of ₹10,00,000.
Trading Account
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Opening stock | 35,000 | By Sales | 1,50,000 |
| To Purchases | 60,000 | By Closing stock | 70,000 |
| To Wages | 30,000 | ||
| To Gross profit c/d (Balancing figure) | 95,000 | ||
| 2,20,000 | 2,20,000 |
Profit and Loss Account
| Dr. | Cr. |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
|
| To Business Expenses | 12,000 | By Trading (Gross profit b/d) | 95,000 | |
| To Depreciation | ||||
| On Plant | 10,000 | |||
| On Machines | 2,500 | |||
| On Building | 25,000 |
37,500 | ||
| To Provision for doubtful debt | 4,250 | |||
| To Net profit c/d (Balancing figure) | 41,250 | |||
| 95,000 | 95,000 | |||
Balance Sheet
as on 31st March, 2017
| Liabilities | Amount (₹) |
Amount (₹) |
|||
| Creditors | 29,000 | Debtors | 85,000 | ||
| Capital Opening | 5,00,000 | Less: 5% provision for Bad debt | (4,250) |
80,750 | |
| Add: Net Profit | 41,250 | Stock | 70,000 | ||
| Add:Further Capital | 20,000 |
Plant | 1,00,000 | ||
| 5,61,250 | Less: 10% Depreciation | (10,000) |
90,000 | ||
| Less: Drawings | (15,000) |
5,46,250 | Machinery | 50,000 | |
| Less: 10% Depreciation | (2,500) |
47,500 | |||
| Land & Building | 2,50,000 | ||||
| Less: 10% Depreciation | (25,000) |
2,25,000 | |||
| Investment | 20,000 | ||||
| Cash in Hand | 7,000 | ||||
| Cash at Bank | 35,000 | ||||
| 5,75,250 | 5,75,250 | ||||
