Short answers : Solutions of Questions on Page Number : 464
Q1 :State the meaning of incomplete records?
Answer : Accounts that are not recorded as per the double entry system are known as incomplete records. According to Kohler (Dictionary for Accountants), single entry system is defined as, ” A system of book-keeping in which as a rule, only records of cash and of personal accounts are maintained; it is always incomplete double entry, varying with circumstances.”
Many small-sized business firms maintain incomplete records of their business transactions. They do not maintain proper books of accounts and mainly prepare books like, Cash Book, personal accounts (of debtors and creditors) and Balance Sheet at the end of the year. They maintain books as per their needs. This system is also known as defective double entry system. The preparation of financial statements is neither as easier nor as effective, as it is under double entry system. Consequently, accurate profit or loss is not possible to ascertain.
Q2 :What are the possible reasons for keeping incomplete records?
Answer :
The possible reasons for keeping incomplete records are:
1. 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.
2. 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.
3. Less expensive: It is an economical mode of maintaining records, as there is no need to appoint specialised accountant.
4. Flexible: Owner may record transactions as per his/her own needs. It can be easily adjusted or changed whenever needed.
Q3 : Distinguish between statement of affairs and balance sheet.
Answer :
|
Difference between Statement of Affairs and Balance
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Basis of Difference |
Statement of Affairs |
Balance Sheet |
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Objective |
It is prepared to determine the amount of capital at a |
It is prepared to ascertain the true financial |
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Reliability |
It is based on estimates; hence, it is less reliable. |
It is based on sophisticated and well developed |
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Accounting Method |
It is prepared from incomplete records of business |
It is prepared when accounts are maintained under |
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Omission |
Omission of assets and liabilities cannot be |
Omission of assets and liabilities can be easily |
Q4 :What practical difficulties are encountered by a trader due to incompleteness of accounting records?
Answer :
The following are the difficulties that are encountered by a trader due to incompleteness of accounting records.
1. 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.
2. Encourages fraud: As the arithmetical accuracy cannot be determined; so, this encourages fraud and provides sufficient scope for bluffing and carelessness.
3. Difficult to ascertain correct profit or loss: Since all expenses and income are not recorded, true profit or loss cannot be correctly ascertained.
4. Difficult to analyse the true financial position: As profit or loss cannot be ascertained easily, so the Balance Sheet cannot be easily prepared. Hence, the absence of Balance Sheet will not reflect the true financial position of the business.
5. Difficulty in comparison: Due to the incomplete records and non-availability of previous years’ data, comparison is not possible. By the same token, comparisons with other firms are also not possible.
6. 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.
7. Raising funds: Since analysis of solvency, profitability and liquidity of business cannot be done, it is difficult to raise fund from outside.
Long answers : Solutions of Questions on Page Number : 464
Q1 :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?
Answer :
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 counts and improper source documents, the latter is prepared purely on the basis of ledger accounts. Thus, the authentication and relevance of the latter is guaranteed. The excess of assets over liabilities (i.e., balancing figure) is denoted as the capital of the firm. The performa of the statement of affairs is presented below.
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Statement of Affairs as on… |
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Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
Bills Payable |
– |
Land and Building |
– |
|
Creditors |
– |
Plant and Machinery |
– |
|
Outstanding Expense |
Furniture |
||
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Capital (Balancing Figure)@ |
Stock |
– |
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Debtors |
– |
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Cash and Bank |
– |
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Prepaid Expenses |
– |
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Capital-Deficiency (Balancing Figure, if any)* |
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* 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.
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Statement of Profit or Loss for the year |
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Particulars |
Amount Rs |
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Closing capital at the |
– |
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Add: Drawings made during the year |
– |
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Less: Additional capital introduced during |
– |
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Adjusted capital at the |
– |
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Less: Capital in the beginning of the |
– |
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Profit (Loss) for the |
– |
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(Balancing |
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Q2 :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.
Answer :
The Profit and Loss Account and the Balance Sheet can be prepared from the incomplete book of accounts through Conversion Method. According to this method, incomplete records are converted into 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.
1. Opening Capital
2. Closing Capital
3. Credit Purchases
4. Cash Purchases
5. Credit Sales
6. Cash Sales
7. Payment from Debtors
8. Payment to Creditors
9. Opening Stock
10. Closing Stock
Below given are the steps included in the conversion method in a chronological order.
1. If opening capital is not given, then the first step is to prepare opening Statement of Affairs that gives the Opening Capital.
2. The second step is to prepare Cash Book that gives the opening or the closing cash and bank balance.
3. The next step is to prepare Total Debtors Account. It is prepared in order to find out one of the missing figures, such ascredit sales, opening debtors, closing debtors and cash received from debtors.
4. 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.
5. The last step is to prepare final accounts. On the basis of the missing figures ascertained in each of the above steps, along with other mentioned information, Trading and Profit and Loss Account and Balance Sheet can be prepared.
Q3 :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.
Answer :
1. 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.
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Statement of Affairs as on….
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Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
Bills Payable |
– |
Land and Building |
– |
|
Creditors |
– |
Machinery |
– |
|
Outstanding Expense |
– |
Furniture |
– |
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Capital (Balancing Figure)@ |
– |
Stock |
– |
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Debtors |
– |
||
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Cash and Bank |
– |
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Prepaid Expenses |
– |
||
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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.
2. 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.
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Total Debtors Account |
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Dr. |
Cr. |
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Particulars |
J.F. |
Amount Rs |
Particulars |
J.F. |
Amount Rs |
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Balance b/d |
|
– |
Cash |
|
– |
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Bills Receivable |
|
– |
Bank |
|
– |
|
(Bill Dishonoured) |
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Discount Allowed |
|
– |
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Bank (Cheque Dishonoured) |
|
– |
Bad Debts |
|
– |
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Credit Sales (Balancing Figure) |
|
– |
Sales Returns |
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– |
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Bills Receivable (Bill Drawn) |
|
– |
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Balance c/d |
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– |
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Total Creditors Account |
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Dr. |
Cr. |
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Particulars |
J.F. |
Amount Rs |
Particulars |
J.F. |
Amount Rs |
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Cash |
– |
Balance b/d |
|
– |
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Bank |
– |
Bank (Cheque Dishonoured) |
|
– |
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Bills Payable |
– |
Bills Payable (Bills Dishonoured) |
|
– |
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Discount Received |
– |
Credit Purchases |
|
– |
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Purchases Returns |
– |
(Balancing Figure ) |
|
– |
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Balance c/d |
– |
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3. 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.
4. 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 : Solutions of Questions on Page Number : 464
Q1 : Following information is given below prepare the statement of profit or loss:
|
|
Rs |
|
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 |
Answer:
|
Statement of Profit and Loss |
|
|
Particulars |
Amount Rs |
|
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 during the year |
75,000 |
Q2 : Manveer started his business on January 01, 2005 with a capital of Rs 4,50,000. On December 31, 2005 his position was as under:
|
Rs |
|
|
Cash |
99,000 |
|
Bills receivable |
75,000 |
|
Plant |
48,000 |
|
Land and Building |
1,80,000 |
|
Furniture |
50,000 |
He owned Rs 45,000 from his friend Susheel on that date. He withdrew Rs 8,000 per month for his household purposes. Ascertain his profit or loss for this year ended December 31, 2005
Answer:
|
Books of Manveer Statement of Affairs as on December 31, 2005 |
|||
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
Loan from Susheel |
45,000 |
Cash |
99,000 |
|
Bills Receivable |
75,000 |
||
|
Plant |
48,000 |
||
|
Closing Capital (Balancing Figure) |
4,07,000 |
Land and Building |
1,80,000 |
|
Furniture |
50,000 |
||
|
4,52,000 |
4,52,000 |
||
|
Statement of Profit and Loss as on December 31, |
|
|
Particulars |
Rs |
|
Capital on December 31, 2005 |
4,07,000 |
|
Add: Drawings made during the year (Rs 8,000 |
96,000 |
|
Less: Capital on January 01, 2005 |
(4,50,000) |
|
Profit during the year 2005 |
53,000 |
Q3 : From the information given below ascertain the profit for the year:
|
Rs |
|
|
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 |
Answer :
|
Statement of Affairs |
|||
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
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 |
||
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Statement of Profit and Loss |
|
|
Particulars |
Amount Rs |
|
Capital at the end of the year |
62,700 |
|
Add: Drawings made during the year |
26,400 |
|
Less: Capital of the beginning of the year |
(70,000) |
|
Less: Additional capital introduced during the |
(17,500) |
|
Profit during the year |
1,600 |
Q4 :From the following information, calculate capital at the beginning:
|
Rs |
|
|
Capital at the end of the year |
4,00,000 |
|
Drawings made during the year |
60,000 |
|
Fresh capital introduce during the year |
1,00,000 |
|
Profit of the current year |
80,000 |
Answer:
Capital in the beginning = Capital at the end + Drawings – (Fresh Capital Introduced + Profit)
= 4,00,000 + 60,000 – (1,00,000 + 80,000)
= Rs 2,80,000
Note: As per the solution, the profit should be of Rs 2,80,000; but, the answer given in the book is Rs 2,60,000.
Q5 : Following information is given below: calculate the closing capital
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Jan.01, 2005 |
Dec.31, 2005 |
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|
Rs |
Rs |
|||
|
Creditors |
5,000 |
30,000 |
||
|
Bills payable |
10,000 |
– |
||
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Loan |
– |
50,000 |
||
|
Bills receivable |
30,000 |
50,000 |
||
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Stock |
5,000 |
30,000 |
||
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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)
Answer :
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Statement of Affairs as on January 01, 2005 |
|||
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Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
Creditors |
5,000 |
Bills Receivable |
30,000 |
|
Bills Payable |
10,000 |
Stock |
5,000 |
|
Capital (Balancing figure) |
22,000 |
Cash |
2000 |
|
37,000 |
37,000 |
||
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Statement of Affairs as on December 31, 2005 |
|||
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
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 December 31, 2005 (Closing) is Rs 20,000
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Statement of Profit and Loss |
|
|
Particulars |
Amount Rs |
|
Capital on December 31, 2005 |
20,000 |
|
Less: Capital on January 01, 2005 |
(22,000) |
|
Loss during the year 2005 |
(2,000) |
Q6 : Mrs Anu started firm with a capital of Rs 4,00,000 on 1st July 2011. She borrowed from her friends a sum of Rs 1,00,000 @ 10% per annum (interest paid) for business and brought a further amount to capital Rs 75,000 on Dec. 31, 2011, her position was :
|
Rs |
|
|
Cash |
30,000 |
|
Stock |
4,70,000 |
|
Debtors |
3,50,000 |
|
Creditors |
3,00,000 |
He withdrew Rs 8,000 per month for the year. Calculate profit or loss for the year and show your working clearly.
Answer :
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Books of Mrs. Anu Statement of Affairs as on December 31, 2011 |
|||
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
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 |
||
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Statement of Profit and Loss as on December 31, |
|
|
Particulars |
Amount Rs |
|
Capital on December 31, 2005 |
4,50,000 |
|
Add: Drawings during the year (8,000 |
48,000 |
|
Less: Capital on January 01, 2005 |
(4,00,000) |
|
Less: Additional capital introduced |
(75,000) |
|
Mrs. Anu earned profit |
23,000 |
Q7 : 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.
|
Rs |
|
|
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 |
|
Drawings 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.
Answer :
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Books of Mr. Arnav Statement of Affairs at the end of year |
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|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
Creditors |
6,00,000 |
Bills Receivable |
60,000 |
|
Capital (Balance 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 |
|
|
Particulars |
Amount Rs |
|
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 |
Q8 : Mr. Akshat keeps his books on incomplete records following information is given below:
|
April 01, 2010 |
March 31, 2011 |
|||
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Rs |
Rs |
|||
|
Cash in hand |
1,000 |
1,500 |
||
|
Cash at bank |
15,000 |
10,000 |
||
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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 Rs 45,000 and introduced Rs 25,000 as further capital in the business compute the profit or loss of the business.
Answer:
|
Books of Mr. Akshat Statement of Affairs as on April 01, 2010 |
|||
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
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 on March 31, 2011 |
|||
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
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 as on March 31, 2011 |
|
|
Particulars |
Amount Rs |
|
Capital on March 31, 2005 |
1,74,000 |
|
Add: Drawings made during the year |
45,000 |
|
Less: Capital on April 01, 2004 |
(1,32,500) |
|
Less: Additional capital introduced |
(25,000) |
|
Profit earned by Mr. Akshat during the year 2010–2011 |
61,500 |
Q9 : Gopal does not keep proper books of account. Following information is given below:
|
Jan. 01, 2011 |
Dec. 31, 2011 |
|||
|
Rs |
Rs |
|||
|
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 Rs 20,000 and withdrew Rs 12,000 from the business. Prepare the statement of profit or loss on the basis of given information
Answer :
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Books of Gopal Statement of Affairs as on January 01, 2011 |
|||
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
Sundry Creditors |
60,000 |
Cash in hand |
18,000 |
|
Loan |
10,000 |
Cash at bank |
1,500 |
|
Stock in trade |
80,000 |
||
|
Sundry Debtors |
36,000 |
||
|
Office Equipments |
25,000 |
||
|
Capital (Balancing figure) |
1,30,500 |
Land and Buildings |
30,000 |
|
Furniture |
10,000 |
||
|
2,00,500 |
2,00,500 |
||
|
Statement of Affairs as on December 31, 2011 |
|||
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
Sundry Creditors |
40,000 |
Cash in Hand |
12,000 |
|
Loan |
8,000 |
Cash at Bank |
2,000 |
|
Stock in Trade |
90,000 |
||
|
Sundry Debtors |
60,000 |
||
|
Office Equipments |
30,000 |
||
|
Capital (Balancing figure) |
1,76,000 |
Land and Buildings |
20,000 |
|
Furniture |
10,000 |
||
|
2,24,000 |
2,24,000 |
||
|
Statement of Profit and Loss as on December 31, 2011 |
|
|
Particulars |
Amount Rs |
|
Capital on December 31, 2005 |
1,76,000 |
|
Add: Drawing made during 2005 |
12,000 |
|
Less: Capital on January 01, 2005 |
(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 Rs 37,500; whereas, the profit given in the book is Rs 53,500.
Q10 : Mr. Muneesh maintains his books of accounts from incomplete records. His books provide the information:
|
Jan. 01, 2011 |
Dec. 31, 2011 |
|||
|
Rs |
Rs |
|||
|
Cash |
1,200 |
1,600 |
||
|
Bills receivable |
– |
2,400 |
||
|
Debtors |
16,800 |
27,200 |
||
|
Stock |
22,400 |
24,400 |
||
|
Investment |
– |
8,000 |
||
|
Furniture |
7,500 |
8,000 |
||
|
Creditors |
14,000 |
15,200 |
||
He withdrew Rs 300 per month for personal expenses. He sold his investment of Rs 16,000 at 2% premium and introduced that amount into business.
Answer :
|
Statement of Affairs as on January 01, 2011 |
|||
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
Creditors |
14,000 |
Cash |
1,200 |
|
Debtors |
16,800 |
||
|
Stock |
22,400 |
||
|
Furniture |
7,500 |
||
|
Capital (Balancing figure) |
33,900 |
||
|
47,900 |
47,900 |
||
|
Statement of Affairs as on December 31, 2011 |
|||
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
Creditors |
15,200 |
Cash |
1,600 |
|
Bills Receivable |
2,400 |
||
|
Debtors |
27,200 |
||
|
Stock |
24,400 |
||
|
Capital (Balancing figure) |
56,400 |
Investment |
8,000 |
|
Furniture |
8,000 |
||
|
71,600 |
71,600 |
||
|
Statement of Affairs as on December 31, 2011 |
|||
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
Creditors |
15,200 |
Cash |
1,600 |
|
Bills Receivable |
2,400 |
||
|
Debtors |
27,200 |
||
|
Stock |
24,400 |
||
|
Capital (Balancing figure) |
56,400 |
Investment |
8,000 |
|
Furniture |
8,000 |
||
|
71,600 |
71,600 |
||
Working Note:
|
Additional Capital Introduced |
= |
16,000 x |
102 |
|
100 |
|||
|
|
= |
16,320 |
|
Q11 :Mr. Girdhari Lal does not keep full double entry records. His balance as on January 01, 2012 is as.
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
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:
|
Rs |
|
|
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 Rs 500 per month out of which to spent Rs 1,500 for business purpose. Prepare the statement of profit or loss.
Answer:
|
Books of Mr. Girdhari Lal Statement of Affairs as on December 31, 2012 |
|||
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
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 |
|
|
Particulars |
Amount Rs |
|
Capital at the end of the year |
39,550 |
|
Add: Drawings (Rs 500 × 12 months) |
6,000 |
|
Less: Capital at the beginning of the year 2012 |
(40,000) |
|
Less: Additional capital introduced |
(1,500) |
|
Profit earned during the year 2012 |
4,050 |
Q12 : Mr. Ashok does not keep his books properly. Following information is available from his books.
|
Jan. 01, 20 |
Dec. 31, 2012* |
|||
|
Rs |
Rs |
|||
|
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 Rs 50,000 and invested this amount into the business. He withdrew from the business Rs 1,500 per month upto July 31, 2011 and thereafter Rs 4,500 per month as drawings. You are required to prepare the statement of profit or loss and statement of affair as on December 31, 2011.
Answer :
|
Books of Mr. Ashok Statement of Affairs as on January 01, 2011 |
|||
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
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 on December 31, 2011 |
|||
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
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 |
|
|
Particulars |
Amount Rs |
|
Capital on December 31, 2005 |
(25,000) |
|
Add: Drawings (Rs 1,500 × 7 months) + (4,500 × 5 months) |
33,000 |
|
Less: Capital on January 01, 2011 |
(18,900) |
|
Less: Additional capital introduced (sale of car) |
(50,000) |
|
Loss during the year 2011 |
(60,900) |
Note: As per the solution, the loss incurred during the year 2011 is Rs 60,900; while the answer given in the book shows Rs 57,900.
Q13 : Krishna Kulkarni has not kept proper books of accounts prepare the statement of profit or loss for the year ending December 31, 2011 from the following information:
|
Jan. 01, 2011 |
Dec. 31, 2011 |
|||
|
Rs |
Rs |
|||
|
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 Rs 5,000 per month for private use.
(b) Depreciation @ 5% on car and furniture @10%.
(c) Outstanding Rent Rs 6,000.
(d) Fresh Capital introduced during the year Rs 30,000.
Answer:
|
Books of Krishna Kulkarni Statement of Affairs as on January 01, 2011 |
|||
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
Creditors |
10,000 |
Cash in Hand |
10,000 |
|
Bills Payable |
4,000 |
Debtors |
20,000 |
|
Bills Receivable |
20,000 |
||
|
Stock |
40,000 |
||
|
Furniture |
8,000 |
||
|
Investment |
40,000 |
||
|
Capital (Balancing figure) |
2,24,000 |
Cast at Bank |
1,00,000 |
|
2,38,000 |
2,38,000 |
||
|
Statement of Affairs as on December 31, 2011 |
|||||||
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
||||
|
Creditors |
46,000 |
Cash in Hand |
36,000 |
||||
|
Bills Payable |
42,000 |
Debtors |
80,000 |
||||
|
Outstanding Expenses |
6,000 |
Bills Receivable |
24,000 |
||||
|
Car |
80,000 |
||||||
|
Less: Depreciation 5% |
(4,000) |
76,000 |
|||||
|
Stock |
30,000 |
||||||
|
Furniture |
48,000 |
||||||
|
Less: Depreciation 10% |
4,800 |
43,200 |
|||||
|
Capital (Balancing figure) |
3,35,200 |
Investment |
50,000 |
||||
|
Cast at Bank |
90,000 |
||||||
|
4,29,200 |
4,29,200 |
||||||
|
Statement of Profit and Loss |
|
|
Particulars |
Amount Rs |
|
Capital on December 31, 2005 |
3,35,200 |
|
Add: Drawings made during the year (Rs 5,000 × 12 months) |
60,000 |
|
Less: Capital on January 01, 2011 |
(2,24,000) |
|
Less: Fresh capital introduced during the year 2011 |
(30,000) |
|
Profit earned during the year 2011 |
1,41,200 |
Q14 : M/s Saniya Sports Equipment does not keep proper records. From the following information find out profit or loss and also prepare balance sheet for the year ended December 31, 2011
|
Dec. 31, 2010 |
Dec. 31, 2011 |
|||
|
Rs |
Rs |
|||
|
Cash in hand |
6,000 |
24,000 |
||
|
Bank overdraft |
30,000 |
– |
||
|
Stock |
50,000 |
80,000 |
||
|
Sundry creditors |
26,000 |
40,000 |
||
|
Sundry debtors |
60,000 |
1,40,000 |
||
|
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 |
||
Drawing Rs 10,000 p.m. for personal use, fresh capital introduce during the year Rs 2,00,000. A bad debts of Rs 2,000 and a provision of 5% is to be made on debtors outstanding salary Rs 2,400, prepaid insurance Rs 700, depreciation charged on furniture and machine @ 10% p.a.
Answer:
|
Statement of Affairs as on December 31, 2010 |
|||
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
Bank Overdraft |
30,000 |
Cash in Hand |
6,000 |
|
Sundry Creditors |
26,000 |
Stock |
50,000 |
|
Bills Payable |
6,000 |
Sundry Debtors |
60,000 |
|
Furniture |
40,000 |
||
|
Bills Receivable |
8,000 |
||
|
Machinery |
50,000 |
||
|
Capital (Balancing figure) |
1,82,000 |
Investment |
30,000 |
|
2,44,000 |
2,44,000 |
||
|
Statement of Affairs as on Dec. 31, 2011 |
|||||||||
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
||||||
|
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 |
||||||
|
Less: Bad-debt |
2,000 |
||||||||
|
1,38,000 |
|||||||||
|
Less: 5% Provision |
(6,900) |
1,31,100 |
|||||||
|
Furniture |
60,000 |
||||||||
|
Capital (Balancing figure) |
4,33,400 |
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 |
|
|
Particulars |
Amount Rs |
|
Capital on December 31, 2011 |
4,33,400 |
|
Add: Drawings made during the year (Rs 10,000 × 12) |
1,20,000 |
|
Less: Capital on December 31, 2010 |
(1,82,000) |
|
Less: Fresh capital introduced during the year 2011 |
(2,00,000) |
|
Profit earned during the year 2011 |
1,71,400 |
Note: As per the solution, the profit earned during the year is Rs 1,71,400 while, according to the book, the answer is Rs 1,71,300.
In order to match our answer with NCERT, the treatment of provision will be made as,
|
Debtors |
1,40,000 |
|
|
Less: 5% Provision |
(7,000) |
|
|
1,33,000 |
||
|
Less: Bad-debts |
(2,000) |
|
|
Debtors |
1,31,000 |
|
However, as per the rule, the treatment of provision will be calculated as,
|
Debtors |
1,40,000 |
|
|
Less: Bad-debts |
(2,000) |
|
|
1,38,000 |
||
|
Less: 5% Provision |
(6,900) |
|
|
Debtors |
Rs 1,31,100 |
|
Q15 : From the following information calculate the amount to be paid to creditors:
|
Rs |
|
|
Sundry creditors as on March 31, 2011 |
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 April 01, 2006* |
2,09,050 |
|
Total purchases |
8,97,000 |
|
Cash purchases |
1,40,000 |
*As per the question, this date should be April 01, 2011
Answer:
|
Creditors Account |
||||
|
Dr. |
Cr. |
|||
|
Particulars |
Amount Rs |
Particulars |
Amount Rs |
|
|
Discount Received |
26,000 |
By Balance b/d |
1,80,425 |
|
|
Return Outwards |
37,200 |
Purchases – credit |
||
|
Bills accepted |
1,99,000 |
(8,97,000 – 1,40,000) |
7,57,000 |
|
|
B/R (endorsed to creditors) |
26,000 |
|||
|
Balance c/d |
2,09,050 |
|||
|
Cash/Bank (Balancing figure) |
4,40,175 |
|||
|
9,37,425 |
9,37,425 |
|||
Q16 : Find out the credit purchases from the following:
|
Rs |
|
|
Balance of creditors April 01, 2010 |
45,000 |
|
Balance of creditors March 31, 2011 |
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 |
Answer:
|
Creditors Account |
||||
|
Dr. |
Cr. |
|||
|
Particulars |
Amount Rs |
Particulars |
Amount Rs |
|
|
Cash |
1,80,000 |
Balance b/d |
45,000 |
|
|
Bank |
60,000 |
B/P (dishonoured) |
3,000 |
|
|
Discount Received |
5,400 |
B/R (dishonoured) |
1,800 |
|
|
B/P (accepted) |
12,750 |
|||
|
Return Outwards |
7,500 |
Purchases – credit |
||
|
B/R (endorsed to creditors) |
4,500 |
(Balancing figure) |
2,56,350 |
|
|
Balance c/d |
36,000 |
|||
|
3,06,150 |
3,06,150 |
|||
Credit Purchases Rs 2,56,350
Q17 : From the following information calculate total purchases.
|
Rs |
|
|
Creditors Jan. 01, 2011 |
30,000 |
|
Creditors Dec. 31, 2011 |
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 |
Answer:
|
Creditors Account |
||||
|
Dr. |
Cr. |
|||
|
Particulars |
Amount Rs |
Particulars |
Amount Rs |
|
|
Cash |
1,51,000 |
Balance b/d |
30,000 |
|
|
Return Outwards |
6,000 |
Purchases – credit |
2,01,500 |
|
|
Bills Payable (accepted) |
54,500 |
(Balancing figure) |
||
|
Balance c/d |
20,000 |
|||
|
2,31,500 |
2,31,500 |
|||
|
Bills Payable Account |
||||
|
Dr. |
Cr. |
|||
|
Particulars |
Amount Rs |
Particulars |
Amount Rs |
|
|
Cash (Bills discharged) |
44,500 |
Balance b/d |
25,000 |
|
|
Creditors – (Bills Payable accepted) (Balancing figure) |
54,500 |
|||
|
Balance c/d |
35,000 |
|||
|
79,500 |
79,500 |
|||
Total Purchase = Cash Purchases + Credit Purchases (as per Creditors Account)
= 1,29,000 + 2,01,500
= Rs 3,30,500
Q18 : The following information is given
|
Rs |
|
|
Opening creditors |
60,000 |
|
Cash paid to creditors |
30,000 |
|
Closing creditors |
36,000 |
|
Returns Inward |
13,000 |
|
Bill matured |
27,000 |
|
Bill dishonoured |
8,000 |
|
Purchases return |
12,000 |
|
Discount allowed |
5,000 |
Calculate credit purchases during the year
Answer:
|
Creditors |
||||
|
Dr. |
Cr. |
|||
|
Particulars |
Amount Rs |
Particulars |
Amount Rs |
|
|
Cash |
30,000 |
Balance b/d |
60,000 |
|
|
Purchases Return |
12,000 |
B/P (dishonoured) |
8,000 |
|
|
B/P (accepted) (see note) |
27,000 |
By Purchases credit  |
37,000 |
|
|
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.
Q19 : From the following, calculate the amount of bills accepted during the year.
Rs
Bills payable as on April 01, 2005 1,80,000
Bills payable as on March 31, 2006 2,20,000
Bills payable dishonoured during the year 28,000
Bills payable honoured during the year 50,000
Answer :
|
Bills Payable Account |
||||
|
Dr. |
Cr. |
|||
|
Particulars |
Amount Rs |
Particulars |
Amount Rs |
|
|
Creditors (dishonoured) |
28,000 |
Balance b/d |
1,80,000 |
|
|
Cash/Bank |
50,000 |
Creditors (acceptance) |
1,18,000 |
|
|
Balance c/d |
2,20,000 |
(Balancing figure) |
||
|
2,98,000 |
2,98,000 |
|||
Q20 : Find out the amount of bills matured during the year on the basis of information given below;
|
Rs |
|
|
Bills payable dishonoured |
37,000 |
|
Closing balance of Bills |
85,000 |
|
Opening balance of Bills |
70,000 |
|
Bills payable accepted |
90,000 |
|
Cheque dishonoured |
23,000 |
Answer:
|
Bills Payable |
||||
|
Dr. |
Cr. |
|||
|
Particulars |
Amount Rs |
Particulars |
Amount Rs |
|
|
Creditors (Bill dishonoured) |
37,000 |
Balance b/d |
70,000 |
|
|
Cash/Bank (Balancing figure) |
38,000 |
Creditors – acceptance |
90,000 |
|
|
Balance c/d |
85,000 |
(Balancing figure) |
||
|
1,60,000 |
1,60,000 |
|||
Bill Payable matured during the year is Rs 38,000.
Q21 :Prepare the bills payable account from the following and find out missing figure if any :
|
Rs |
|
|
Bills accepted |
1,05,000 |
|
Discount received |
17,000 |
|
Purchases returns |
9,000 |
|
Return inwards |
12,000 |
|
Cash paid to accounts payable |
50,000 |
|
Bills receivable endorsed to |
45,000 |
|
Bills dishonoured |
17,000 |
|
Bad debts |
14,000 |
|
Balance of accounts payable |
85,000 |
|
Credit purchases |
2,15,000 |
Answer:
|
Bills Payable |
||||
|
Dr. |
Cr. |
|||
|
Particulars |
Amount Rs |
Particulars |
Amount Rs |
|
|
Creditors (Bills dishonoured) |
17,000 |
Creditors (acceptance) |
1,05,000 |
|
|
Cash/Bank (Balancing figure) |
88,000 |
|||
|
1,05,000 |
1,05,000 |
|||
|
Account Payable |
||||
|
Dr. |
Cr. |
|||
|
Particulars |
Amount Rs |
Particulars |
Amount Rs |
|
|
Discount Received |
17,000 |
Purchases – Credit |
2,15,000 |
|
|
Purchases Return |
9,000 |
B/P (dishonoured) |
17,000 |
|
|
Cash |
50,000 |
|||
|
B/R (endorsed) |
45,000 |
Balance b/d |
79,000 |
|
|
B/P (acceptance) |
1,05,000 |
(Balancing figure) |
||
|
Balance c/d |
85,000 |
|||
|
3,11,000 |
3,11,000 |
|||
Bills payable discharged is Rs 88,000 and the opening balance of creditors is Rs 79,000.
Q22 : Calculate the amount of bills receivable during the year.
|
Rs |
|
|
Opening balance of bills |
75,000 |
|
Bill dishonoured |
25,000 |
|
Bills collected (honoured) |
1,30,000 |
|
Bills receivable endorsed to |
15,000 |
|
Closing balance of bills |
65,000 |
Answer:
|
Bills Receivable |
||||
|
Dr. |
Cr. |
|||
|
Particulars |
Amount Rs |
Particulars |
Amount Rs |
|
|
Balance b/d |
75,000 |
Debtors (B/R dishonoured) |
25,000 |
|
|
Cash/Bank (honoured) |
1,30,000 |
|||
|
Creditors (endorsed) |
15,000 |
|||
|
Debtors (B/R received) |
1,60,000 |
Balance c/d |
65,000 |
|
|
(Balancing figure) |
||||
|
2,35,000 |
2,35,000 |
|||
Bills receivable received from Debtors Rs 1,60,000.
Q23 : Calculate the amount of bills receivable dishonoured from the following information.
|
Rs |
|
|
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 |
Answer :
|
Bills Receivable |
||||
|
Dr. |
Cr. |
|||
|
Particulars |
Amount Rs |
Particulars |
Amount Rs |
|
|
Balance b/d |
1,20,000 |
Cash/Bank (honoured) |
1,85,000 |
|
|
Creditors (endorsed) |
22,800 |
|||
|
Balance c/d |
50,700 |
|||
|
Debtors (B/R received) |
1,50,000 |
Debtors (dishonoured) |
11,500 |
|
|
(Balancing figure) |
(Balancing figure) |
|||
|
2,70,000 |
2,70,000 |
|||
Bills Receivable dishonoured is Rs 11,500.
Q24 : From the details given below, find out the credit sales and total sales.
|
Rs |
|
|
Opening debtors |
45,000 |
|
Closing debtors |
56,000 |
|
Discount allowed |
2,500 |
|
Sales returns |
8,500 |
|
Irrecoverable amount |
4,000 |
|
Bills receivables 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 |
Answer:
|
Debtors Account |
||||
|
Dr. |
Cr. |
|||
|
Particulars |
Amount Rs |
Particulars |
Amount Rs |
|
|
Balance b/d |
45,000 |
Discount Allowed |
2,500 |
|
|
B/R (dishonoured) |
3,000 |
Sales Returns |
8,500 |
|
|
Bank (cheque dishonoured) |
7,700 |
Bad-debts (irrecoverable amount) |
4,000 |
|
|
Sales – Credit |
2,82,300 |
B/R (received) |
12,000 |
|
|
(Balancing figure) |
Cash |
2,30,000 |
||
|
Bank |
25,000 |
|||
|
Balance c/d |
56,000 |
|||
|
3,38,000 |
3,38,000 |
|||
Credit sales is Rs 2,82,300
Total Sales = Cash Sales + Credit Sales
= 80,000 + 2,82,300
= Rs 3,62,300
Q25 : From the following information, prepare the bills receivable account and total debtors account for the year ended December 31, 2011.
|
Rs |
|
|
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 Dec. 31, 2011 |
75,500 |
Answer:
|
Debtors Account |
||||
|
Dr. |
Cr. |
|||
|
Particulars |
Amount Rs |
Particulars |
Amount Rs |
|
|
Balance b/d |
1,80,000 |
Return Inwards |
78,000 |
|
|
Sales—Credit |
14,50,000 |
Discount Allowed |
55,000 |
|
|
Cash |
10,25,000 |
|||
|
Bad debt (irrecoverable amount) |
10,000 |
|||
|
B/R (received) |
1,61,000 |
|||
|
Balance c/d |
3,01,000 |
|||
|
(Balancing figure) |
||||
|
16,30,000 |
16,30,000 |
|||
|
Bills Receivable Account |
||||
|
Dr. |
Cr. |
|||
|
Particulars |
Amount Rs |
Particulars |
Amount Rs |
|
|
Balance b/d |
55,000 |
Cash (Bills matured) |
80,500 |
|
|
Creditors (endorsed) |
60,000 |
|||
|
Balance c/d |
75,500 |
|||
|
Debtors (received) |
1,61,000 |
|||
|
(Balancing figure) |
||||
|
2,16,000 |
2,16,000 |
|||
The missing figure in the bills receivable account–B/R received from debtors Rs 1,61,000 and the missing figure in the debtors account–closing balance is Rs 3,01,000.
Q26 :Prepare the suitable accounts and find out the missing figure if any.
|
Rs |
|
|
Opening balance of debtors |
14,00,000 |
|
Opening balance of bills |
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 |
8,25,000 |
|
Discount allowed |
37,500 |
|
Irrecoverable amount |
17,500 |
|
Returns inwards |
28,000 |
|
Bills receivable received from |
1,05,000 |
|
Bills receivable matured |
2,80,000 |
|
Bills discounted |
65,000 |
|
Bills endorsed to creditors |
70,000 |
Answer :
|
Debtors Account |
||||
|
Dr. |
Cr. |
|||
|
Particulars |
Amount Rs |
Particulars |
Amount Rs |
|
|
Balance b/d |
14,00,000 |
Cash |
10,75,000 |
|
|
Bank (cheque dishonoured) |
27,000 |
Bank |
8,25,000 |
|
|
B/R (dishonoured) |
40,000 |
Discount Allowed |
37,500 |
|
|
Bad debt (irrecoverable amount) |
17,500 |
|||
|
Return Inwards |
28,000 |
|||
|
Sales—Credit (Balancing figure) |
6,21,000 |
B/R (received) |
1,05,000 |
|
|
20,88,000 |
20,88,000 |
|||
|
Bills Receivable |
||||
|
Dr. |
Cr. |
|||
|
Particulars |
Amount Rs |
Particulars |
Amount Rs |
|
|
Balance b/d |
7,00,000 |
Cash (B/R matured) |
2,80,000 |
|
|
Bank (Bill endorsed) |
65,000 |
|||
|
Creditors (endorsed) |
70,000 |
|||
|
Debtors (B/R received) |
1,05,000 |
Balance c/d |
3,50,000 |
|
|
Debtors (dishonoured) |
40,000 |
|||
|
(Balancing figure) |
||||
|
8,05,000 |
8,05,000 |
|||
Note: As per solution, the missing figure in the bills receivable account is B/R dishonoured of Rs 40,000. The missing figure in the debtors account is the credit sales of Rs 6 ,21,000 However, the NCERT book shows a credit sales Rs 5,16,000.
In order to match our answer with that of the book, B/R received from the customers is not shown in the debtors account.
Q27 : From the following information ascertain the opening balance of sundry debtors and closing balance of sundry creditors
|
Rs |
|
|
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 |
30,000 |
|
Bills receivable received |
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
Rs 85,000 was for cash sales.
(Hint: Total sales = 4,00,000 = 3,00,000 x 100 x 100⁄75
Answer :
|
Sundry Debtors |
||||
|
Dr. |
Cr. |
|||
|
Particulars |
Amount Rs |
Particulars |
Amount Rs |
|
|
Balance b/d |
54,000 |
Discount Allowed |
2,500 |
|
|
(Balancing figure) |
B/R (received) |
75,000 |
||
|
B/R (dishonoured) |
3,500 |
Cash |
2,20,000 |
|
|
Sales—Credit |
3,15,000 |
|||
|
Balance c/d |
75,000 |
|||
|
3,72,500 |
3,72,500 |
|||
|
Sundry Creditors |
||||
|
Dr. |
Cr. |
|||
|
Particulars |
Amount Rs |
Particulars |
Amount Rs |
|
|
Discount Received |
1,500 |
Balance b/d |
50,000 |
|
|
Cash |
1,35,000 |
Purchases credit |
2,95,000 |
|
|
B/P (accepted) |
30,000 |
|||
|
Balance c/d |
1,78,500 |
|||
|
(Balancing figure) |
||||
|
3,45,000 |
3,45,000 |
|||
Opening balance of debtors is Rs 54,000 and the closing balance of creditors is Rs 1 ,78,500
Total Sales = Cash Sales + Credit Sales
Total Sales = Cost of Goods Sold + Gross Profit
Cost of Goods Sold = Opening Stock + Purchases + Closing Stock
= 30,000 + 2,95,000 + 25,000
= Rs 3,00,000
Let sales be 100%
Sales = Cost of Goods sold + Gross Profit
Or,100 = Cost of Goods sold + 25%
Cost of Goods Sold = 100% – 25% = 75%
Gross Profit = Cost of Goods Sold ⁄% of Cost of Goods Sold × % of Gross Profit
= 3,00,000⁄75× 25
= 1,00,000
Q28 : Mrs Bhavana keeps his books by Single Entry System. You.re required to prepare final accounts of her business for the year ended December 31, 2005. Her records relating to cash receipts and cash payments for the above period showed the following particulars.
|
Summary of Cash |
|||
|
Dr. |
Cr. |
||
|
Receipts |
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 |
35,000 |
||
|
Dec. 31,2005 |
|||
|
Cash in hand |
7,000 |
||
|
1,52,000 |
1,52,000 |
||
The following information is also available:
|
Jan. 01, 2005 |
Dec. 31, 2005 |
|||
|
Rs |
Rs |
|||
|
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 |
||
ll 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%.
Answer:
|
Books Debtors Account |
||||
|
Dr. |
Cr. |
|||
|
Particulars |
Amount Rs |
Particulars |
Amount Rs |
|
|
Balance b/d |
55,000 |
Cash |
1,20,000 |
|
|
Sales—Credit |
1,50,000 |
Balance c/d |
85,000 |
|
|
2,05,000 |
2,05,000 |
|||
|
Creditors |
||||
|
Dr. |
Cr. |
|||
|
Particulars |
Amount Rs |
Particulars |
Amount Rs |
|
|
Cash |
53,000 |
Balance b/d |
22,000 |
|
|
Purchases Credit |
60,000 |
|||
|
Balance c/d |
29,000 |
|||
|
82,000 |
82,000 |
|||
|
Statement |
|||
|
Particulars |
Amount Rs |
Particulars |
Amount Rs |
|
Creditors |
22,000 |
Debtors |
55,000 |
|
Capital—Opening |
5,00,000 |
Stock |
35,000 |
|
(Balancing figure) |
Plant |
1,00,000 |
|
|
Machinery |
50,000 |
||
|
Land and Building |
2,50,000 |
||
|
Investment |
20,000 |
||
|
Cash |
12,000 |
||
|
5,22,000 |
5,22,000 |
||
Note: It has been assumed that total sales are credit sales (i.e. all sales are made on credit) and total purchases are credit purchases (i.e. all purchases are made on credit).
Plant of Rs 1,00,000 has been taken in to the statement of affairs on January 01, 2005, instead of Rs 10,00,000
|
Trading Account as |
||||
|
Dr. |
Cr. |
|||
|
Particulars |
Amount Rs |
Particulars |
Amount Rs |
|
|
Opening Stock |
35,000 |
Sales |
1,50,000 |
|
|
Purchases |
60,000 |
Closing Stock |
70,000 |
|
|
Wages |
30,000 |
|||
|
Profit and Loss (Gross Profit) |
95,000 |
|||
|
(Balancing figure) |
||||
|
2,20,000 |
2,20,000 |
|||
|
Profit and Loss |
||||
|
Dr. |
Cr. |
|||
|
Particulars |
Amount Rs |
Particulars |
Amount Rs |
|
|
Business Expenses |
12,000 |
Trading (Gross profit) |
95,000 |
|
|
Depreciation on Plant |
10,000 |
|||
|
Depreciation on Building |
25,000 |
|||
|
Depreciation Machines |
2,500 |
|||
|
Provision for Doubtful Debt |
4,250 |
|||
|
Net Profit |
41,250 |
|||
|
(Balancing figure) |
||||
|
95,000 |
95,000 |
|||
|
Balance Sheet as |
|||||||||
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
||||||
|
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 and 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 |
||||||||