After studying this chapter, you will be able to understand
The Meaning of Single Entry System (or) Incomplete Records System
The Salient Features of Single Entry System
The Advantages of Single Entry System
Disadvantages of Single Entry System
Differences Between Incomplete Records System (Single Entry) and Double Entry System
Methods of Preparation of Accounts (Ascertainment of Profit or Loss from Incomplete Records)
To Ascertain Profit/loss Under Statement of Affairs Method
To Differentiate Between Statement of Affairs and Balance Sheet
To Compute Profit/Loss – the Different Steps and Stages Involved
The Concept of Conversion Method
The Differences in the Accounting Treatment Between the Incomplete Records System and the Partnership Firms
To Ascertain the Missing Figures in the Preparation of Final Accounts Under Incomplete Records System Under Conversion Method
To Prepare Trading and Profit and Loss Account and Balance Sheet from the Particulars Obtained from Incomplete Records
Accounting is an ancient art. Any business enterprise should keep a systematic record of transactions. A systematic record of such transactions is called “accounting” – precisely. But here one has to understand what a “transaction” really means. A well-known definition explains it as types of actions and reactions having monetary implications of one person or firm in relation to another person or firm. It clearly reveals that if there is a transaction then there must be transfer of money from one person (firm) to another person (firm). Hence the necessity arises to record any type of transaction in a systematic way.
Notwithstanding the fact that the art of accounting has attained perfection with the advent of Double Entry System in India and accounting equation approach in the United States, still some people follow rudimentary method of keeping accounts. Some maintain personal accounts only. No other accounts relating to assets, liabilities, expenses, gains and so on are maintained. Recording all types of transactions in a concise and complete set of records is not being followed. Such system of accounting popularly known as Single Entry System is still in vague. Technically speaking, there is no such system of accounting called “Single Entry System.” It is technically termed as “Accounts from Incomplete Records.” It is called as incomplete records because real and nominal counts are not maintained. Some transactions are not at all recorded. In some transactions only one aspect (debit or credit) is recorded and only personal accounts are kept.
In this chapter, salient features of this system and proper accounting treatment to attain perfection from such incomplete records of accounts are explained in detail.
Accountants, in general, feel reluctant to use the phrase “Single Entry System,” because strictly speaking there exists no such system. The so-called system is developed by certain business entities for their convenience without adhering to the rules of double entry system. Under this system only cash book and personal accounts are maintained, but the most essentially needed subsidiary books – backbone of the double entry system – are not maintained. To put it in a nutshell, this system may be termed as an incomplete double entry system. Kohler defines it as “A system of book-keeping in which as a rule only records of cash and personal accounts are maintained; it is always incomplete double-entry, varying with circumstances.”
1. Suitable for Sole Trading Concerns: This system is generally vogue in sole trading concerns and to some extent in partnership firms. But limited companies cannot keep their accounts under this system because of legal requirements.
2. Only Personal Accounts: Only personal accounts are kept.
3. Mix-up of all Transactions: It is very common in this system to maintain one single cash book mixing business as well as private transactions.
4. No Uniformity in Maintenance of Records: There is no uniformity in maintaining the records. It varies from firm to firm according to the convenience of the firm.
5. Only an estimate: Profit/loss ascertained under this system is only an estimate and it may not reflect the accurate status of the business entities.
6. Only Vouchers and No Subsidiary Books: For information one has to rely on vouchers only, because it is not recorded then and there in subsidiary books.
7. Lacks Accuracy: It lacks accuracy, scientific and systematic method of recording/accounting transactions.
Basis of Difference | Incomplete Records System (Single Entry) | Double Entry System |
---|---|---|
1. Aspect of transaction |
In some cases both the aspects (i.e., Dr. and Cr.) and in most of the cases only one aspect of the transaction is recorded |
Both aspects of transactions are recorded in all cases |
2. Assumptions and principles |
It is not based on certain assumptions and principles |
It is based on certain assumptions and principles |
3. Nature of accounts |
Generally, personal accounts and cash accounts are maintained |
All types of accounts, Personal, Real and Nominal accounts are maintained |
4. Trial balance Trial |
Trial Balance cannot be prepared |
Trial Balance can be prepared |
5. Profit/loss |
Trading and Profit and Loss accounts are not prepared. So, profit/loss cannot be ascertained accurately |
Trading and Profit and Loss accounts can be prepared and profit/loss can be ascertained accurately |
6. Financial position |
In the absence of Balance Sheet, financial position cannot be ascertained |
As Balance Sheet is prepared, financial position can be easily ascertained |
7. Adjustments |
Usually, adjustments are not carried out in preparing accounts |
All types of adjustments are carried out in the preparation of accounts |
8. Utility |
This system is suitable only for small size business concerns |
This system is suitable for all types of business entities |
9. Recognition |
Records maintained under this system are not recognized by statutory bodies |
All statutory bodies give due recognition to the records maintained under this system |
10. Accuracy and reliability |
Arithmetical accuracy and reliability of accounting results cannot be expected |
All results are reliable and accurate |
Any business entity wants to know its financial position and operating results for a specific period. Under this system, as no records are maintained in accordance with standardised accounting principles, it is not possible to prepare final accounts – Trading and Profit and Loss Account to furnish operating results and Balance Sheet to ascertain its financial position.
For this system, generally, the following two methods are employed to ascertain profit /loss.
A statement that shows items of different assets and liabilities is referred to as the Statement of Affairs.
(i) Statement of Affairs is prepared to ascertain the capital, (i.e. excess of assets over liabilities) on a particular date
Two statements of affairs have to be prepared – one to ascertain the capital in the beginning of the accounting period and the other to ascertain the capital at the end of the accounting period.
Such statements will reveal the amount relating to capital in the beginning and capital at the end, respectively.
This statement will simply depict whether there is an increase or decrease in capital during the accounting period. Mere increase or decrease may not be enough to compute the net profit/loss, as many other factors can affect such increase or decrease in the capital.
So, the necessity arises to make certain adjustments to compute the capital at the end. This can be done by preparing another statement, which is known as Statement of Profit and Loss.
(ii) Statement of Profit and Loss is prepared mainly to make adjustments to ascertain the actual capital during the accounting period
Adjustments relating to the following have to be made:
This Statement of Profit and Loss is prepared by making the adjustments in the capital to arrive at profit/loss.
Under this method, these two statements (1) Statement of Affairs and (2) Statement of Profit and Loss have to be prepared to compute profit/loss during an accounting period.
To put in a nutshell:
Statement of Affairs Method requires preparation of two statements: (1) preparation of Statement of Affairs to compute the capital and (2) preparation of Statement of Profit or Loss (adjustments of certain items with the capital) to compute profit or loss.
Statement of Affairs of … as on …
Statement Showing Profit or Loss for the Period Ending …….
Particulars | Rs |
---|---|
1. Capital (generally, at the end of accounting period) |
— |
2. Add: Drawings (both cash in hand and kind) |
— |
3. Less: Additional capital introduced during the accounting period (both cash in hand and kind) |
— |
4. Adjusted capital at the end of the accounting period (1 + 2 – 3) |
___ |
5. Capital at the beginning of the accounting period |
___ |
6. Profit if 4 > 5 (i.e., 4 – 5) or Loss if 4 < 5 (i.e., 5 – 4) |
___ |
Even though the Statement of Affairs is similar or looks like a Balance Sheet, it really differs in the following aspects:
Basis of Distinction | Statement of Affairs | Balance Sheet |
---|---|---|
1. Main objective |
Computation of capital in the beginning and at the end is the main objective in preparing this statement |
To ascertain the financial position on a specific date is the reason for preparing the Balance Sheet |
It is prepared on the basis of estimates mostly and to some extent on the basis of ledgers |
It is prepared mainly on the basis of ledgers only |
|
3. Reliability |
It lacks reliability as it relies on estimates, assumptions and information obtained from memory |
Balance Sheet is reliable as it relies on records only and can be verified at any time |
4. Omissions |
Omission of an item (asset or liability) cannot be detected easily |
Such omissions can at once be detected due to non-agreement of both the sides of Balance Sheet |
5. Financial position |
It reflects only the estimated financial position |
It shows the true financial position |
6. Arithmetical accuracy |
As Trial Balance cannot be prepared, it suffers from arithmetical accuracy |
Preparation of Trial Balance ensures arithmetical accuracy |
7. Basis of valuation |
No standard method of valuation is adapted. It is mostly prepared in an arbitrary way and method of valuation is not disclosed as such |
Standardised accounting principles are adopted in assessing the value of assets. Method of valuation is properly disclosed |
8. Assets– Liabilities equation |
Assets may not be equal to liabilities |
Total of assets side and total of liabilities side will be equal always |
Computation of Profit/Loss as per Statement of Affairs Method
Illustration: 1
From the particulars provided, you are required to calculate the capital of Mrs. Bhagya Shree as on Mar 31, 2009.
Cash in hand Rs 15,000; Stock in trade Rs 75,000; Sundry Creditors Rs 20,000; Sundry Debtors Rs 70,000; Bills Payable Rs 50,000; Bills Receivable Rs 40,000; Bank Overdraft Rs 30,000; Loans and Advances Rs 90,000 (Dr.); Outstanding Expenses Rs 25,000; Prepaid Expenses Rs 10,000; Loan from X (Cr.) Rs 1,50,000; Land and Building Rs 1,70,000.
Solution
Step 1: |
Draw the format |
Step 2: |
Classify the items whether they relate to asset or liability |
Step 3: |
Record them in the format |
Step 4: |
Add the assets side and liabilities side |
Step 5: |
Find the difference |
Step 6: |
Result will be the capital at Mar 31, 2009 |
Statement of Affairs of Mrs. Bhagya Shree as on 31.3.2009
Note: It is given loans and advance as (Dr.), so it has to be treated as an asset.
Illustration: 2
Opening Capital Rs 50,000; drawings Rs 15,000; capital introduced during the year Rs 25,000; Closing Capital Rs 1,05,000. Ascertain the profit/loss for the year 2008.
Solution
Closing Capital is taken as base |
|
Step 2: |
Add the Drawings |
Step 3: |
Deduct the Additional Capital (less) |
Step 4: |
This figure represents adjusted capital at the end (1 + 2 – 3) |
Step 5: |
Deduct the Opening Capital (less) |
Step 6: |
Profit (4 – 5) |
Statement of Profit or Loss for the year ending 2008
Particulars | Rs |
---|---|
1. Capital at the end |
1,05,000 |
2. Add: Drawings |
15,000 |
|
1,20,000 |
3. Less: Additional Capital |
25,000 |
4. Adjusted Capital at the end |
95,000 |
5. Less: Opening Capital |
50,000 |
6. Profit (4 > 5; 4 – 5) |
45,000 |
Illustration: 3
Mr. Sameer keeps his accounts on Single Entry System from the following figures available, compute profits made by him for the year ended Dec 31, 2008.
As on 31.12.2007 Rs | As on 31.12.2008 Rs | |
---|---|---|
Cash in hand |
10,000 |
15,000 |
Cash at bank |
50,000 |
80,000 |
Furniture |
10,000 |
10,000 |
Stock in trade |
75,000 |
1,00,000 |
Sundry Creditors |
30,000 |
35,000 |
Sundry Debtors |
20,000 |
30,000 |
During the year 2008, he withdrew Rs 500 every month for his personal use and invested on June 15, 2008 Rs 10,000 as additional capital.
Solution
Particulars are available for two years. So, Statement of Affairs – one for the year ending on Dec 31, 2007 and the other one for the year ending on Dec 31, 2008 – have to be prepared.
Remember the steps and proceed accordingly.
Stage I: Computation of Opening Capital
Statement of Affairs as on 31.12.2008
Stage II: Computation of Closing Capital
Statement of Affairs as on 31.12.2008
Stage III: Ascertainment of profit or loss
Remember the steps involved in computing the profit or loss (preparation of the Statement of Profit or Loss).
|
|
Rs |
Step 1: |
Capital at the end, i.e. on 31.12.88 |
2,00,000 |
Step 2: |
Add: Drawings (Rs 500 per month × 12) |
6,000 |
|
|
2,06,000 |
Step 3: |
Less: Additional capital, introduced on June 15 |
10,000 |
Step 4: |
Adjusted capital at the end of 2008 |
1,96,000 |
Step 5: |
Less: Capital in the beginning, i.e. on 31.12.2007 |
1,35,000 |
Step 6: |
Profit (4 – 5) (4 > 5) |
61,000 |
Illustration: 4
Mrs. Renu could not keep complete records. She provides you with the following details:
As on 1.4.2008 Rs | As on 31.3.2009 Rs | |
---|---|---|
Bank balance |
9,000 |
1,200 (Cr.) |
Stock in trade |
41,000 |
70,000 |
Sundry Debtors |
30,000 |
40,000 |
Sundry Creditors |
15,000 |
6,000 |
Bills payable |
5,000 |
3,000 |
Bill receivable |
13,000 |
17,000 |
Furniture and fixtures |
6,000 |
6,000 |
Buildings |
1,20,000 |
1,20,000 |
Further Information
She sold her private investments of Rs 6,000 @ 33 1/3% premium and brought this money in her business on June 1, 2008. Her drawings were Rs 1,500 per month. Stock costing Rs 9,000 was taken by her for personal use. Rs 5,000 is outstanding for wages and Rs 2,000 for salaries. Prepaid insurance Rs 500, outstanding medical expenses amounted to Rs 2,000. A provision @ 10% is required for doubtful debts. Depreciation is to be written off @ 5% on furniture and fixtures and 10% on buildings.
You are required to compute profit and loss by statement of affairs method for the year 2008–2009 and Balance Sheet as on Mar 21, 2009.
Solution
Stage I: Computation of Opening Capital and Closing Capital
Statement of Affairs of Mrs. Renu as on 1.4.2008 and as at 31.3.2009
Stage II: Calculation of profit or loss
|
|
Rs |
Step 1: |
Capital at the end (i.e., on 31.3.2009) |
2,42,800 |
Step 2: |
Add: Drawings (Cash Rs 1,500 × 12 + Stock Rs 9,000) |
27,000 |
|
|
2,69,800 |
Step 3: |
Loss: Additional capital (Rs 6,000 = 33 1/3 of Rs 6,000) |
8,000 |
Step 4: |
Adjusted capital at the end (1 + 2 – 3) |
2,61,800 |
Step 5: |
Less capital in the beginning (i.e., as on 1.4.2008) |
1,99,000 |
Step 6: |
Profit (4 > 5; 4 – 5) (but subject to adjustments) |
62,800 |
Step 7: |
Less: Other adjustments |
|
|
Provision for doubtful debts |
4,000 |
|
Depreciation on furniture and fixtures |
300 |
|
Depreciation on building |
12,000 |
|
Outstanding Wages |
5,000 |
|
Outstanding Salaries |
2,000 |
Outstanding Medical Expenses |
2,000 |
Rs |
|
25,300 |
|
* Pre-paid insurance |
(500) |
|
|
24,800 |
24,800 |
Step 8: Net Profi t for the year (Step 6 – Step 7) = 38,000
Stage III: Preparation of Balance Sheet as on 31.3.2009
Balance Sheet of Mrs. Renu as on 31.3.2009
Notes
(i) |
Care should be taken while recording bank balance by noting whether it is credit balance. |
(ii) |
Only net profit has to be added to the capital |
*1(iii) |
Pre-paid insurance – Pre-paid expense – see how it is treated in further adjustments |
(iv) |
While preparing the Balance Sheet, as usual, all the items pertaining to the date of the Balance Sheet will have to be recorded. |
Illustration: 5
On 1.4.2008, Mr. B.P. Singh started a business with a capital of Rs 1,00,000 with which he opened a bank account. In the same date, he bought furniture for Rs 15,000 and stock of goods for Rs 45,000.
On Mar 31, 2009, the stock in hand was valued at Rs 70,000 and fittings stood at Rs 13,500. Book debts amounted to Rs 50,000 of which Rs 2,000 was considered as bad. His bank balance as per cash book was Rs 10,000. A cheque of Rs 1,750 sent for deposit on Mar 29, 2009 was realised on Apr 7, 2009 and a cheque of Rs 900 issued on Mar 17, 2009 was not presented till Apr 3, 2009. Bank charges amounted to Rs 100, but the same was not intimated to him upto Mar 31, 2009. His drawings stood at Rs 750 per month. He also took goods worth Rs 7,500 for personal use from the business. Creditors stood at Rs 12,000 at the end. You are required to prepare a statement showing profit or loss for the period ending on Mar 31, 2009.
Solution
Stage I: Statement of Affairs as on Mar 3, 2009
Stage II: Statement of Profit or loss for the year ending on Mar 31, 2009
Rs | |
---|---|
1. Capital on Mar 3, 2009 (Computed as in Stage I) |
1,29,400 |
2. Add: Drawings (Rs 750 per month × 12 + Stock worth Rs 7,500) |
16,500 |
3. Adjusted Capital |
1,45,900 |
4. Less: Capital on 1.4.2008 (Given in question) |
1,00,000 |
5. Profit (3 > 4; 3 – 4) for the year |
45,900 |
Illustration: 6
Mr. Jain had Rs 2,00,000 in bank on Jan 1, 2008 on which date he started business. His incomplete records reveal:
31.3.2008 Rs | 31.3.2009 Rs | |
---|---|---|
Cash in hand |
10,000 |
16,000 |
Stock in trade |
25,500 |
32,500 |
Sundry Debtors |
40,000 |
50,000 |
Sundry Creditors |
22,500 |
16,500 |
On Feb 1, 2008, he started withdrawing Rs 2,500 per month from the business for his personal use. His account in the bank reveals:
Deposits Rs | Withdrawals Rs | |
---|---|---|
Jan 1, 2008 |
2,00,000 |
— |
Jan 1, 2008 to Mar 31, 2008 |
— |
1,25,000 |
Apr 1, 2008 to Mar 31, 2009 |
2,12,500 |
1,75,000 |
The above withdrawals included payments by cheques of Rs 1,06,000 and Rs 37,500, respectively, during the period from Jan 1, 2008 to Mar 31, 2008 and from Apr 1, 2008 to Mar 31, 2009 for purchase of machinery for the business. The deposits after Jan 1, 2008 consisted wholly of sale price received from customers by cheques. Determine the profit/loss of Mr. Jain for the year ended Mar 31, 2009.
(B.Com Bombay University – Modified Slightly)
Solution
As some transactions relate to bank and through cheques, while entering the amount relating to bank the following adjustments have to be made:
Step 1
Step 2
|
|
Rs |
|
Opening balance of cash at bank |
75,000 |
|
(as worked out earlier) |
|
|
(i.e., on 1.4.2008) |
|
|
Add: Deposits for this period |
2,12,500 |
|
i.e., From 1.4.2008 to 31.3.2009 |
_____ |
|
(given in question) |
2,87,500 |
|
Less: Withdrawals for this period |
|
|
i.e., from 1.4.2008 to 31.3.2009 |
|
|
(given in question) |
1,75,000 |
|
*2 Cash at bank on Mar 31, 2009 |
1,12,500 |
Step 3
Step 4
Stage I: Statement of Affairs as on Mar 31, 2008
Stage II: Statement of Affairs as on Mar 31, 2009
Stage III: Statement of Profit/Loss for the year ending on Mar 31, 2009
Rs | |
---|---|
Capital as on Mar 31, 2009 |
3,13,000 |
Add: Drawings (Rs 2,500 × 12) |
30,000 |
Adjusted Capital |
3,43,000 |
Less: Capital as on Mar 31, 2008 |
2,34,000 |
Net Profit (3 > 4; 3 – 4) for the year |
1,09,000 |
Net worth direct from the Balance Sheet.
Illustration: 7
The Balance Sheets of Mrs. Rukmani as on Mar 31, 2008 and Mar 31, 2009 are given below. She is unable to understand what has happened to the profit of Rs 75,000 as disclosed by the Balance Sheet on Mar 31, 2009 as she does not find the same in her bank balance. Draw up a statement which may help her solve the problem:
Balance Sheets as on Mar 31, 2008 and 2009
[B.Com. (Kolkata University) – Slightly Modified]
Solution
Stage I
Notes
Stage II: Computation of Profit for the Year Ending Mar 31, 2009
* Net increase in assets (decrease in liabilities) |
= |
63,000 |
Add: Drawings |
= |
12,000 |
Profit for the year ending Mar 31, 2009 |
= |
75,000 |
Now Mrs. Rukmani will be able to understand how the profit Rs 75,000 shown in the Balance Sheet is arrived at.
The accounting treatment for a partnership firm under this system is mostly similar to those adopted in sole proprietorship business that we have discussed so far in this chapter.
But the accounting treatment differs in the following aspects:
The accounting treatment can be best explained with the help of an illustration.
Illustration: 8
X, Y and Z were partners and towards the end of 2008, most of their books and records were destroyed by tsunami. Their Balance Sheet as on Dec 31, 2007 not affected much by the natural calamity and other information is given below:
The drawing during 2008 were X – Rs 56,000; Y – Rs 40,000 and Z – Rs 26,000.
On Dec 31, 2008: cash at bank Rs 1,28,000; debtors Rs 1,61,000; stock Rs 2,36,000; advance payment Rs 1000; creditors Rs 2,41,600; machinery is to be depreciated @ 10% p.a and fixtures and fitting @ 7 1/2%. Interest on capital is to be calculated @ 5% p.a.
Partners share profit/loss as |
X − 1/2 |
|
Y − 1/3 |
|
Z − 1/6 |
You are required to prepare a statement showing new trading profit for the year 2008 and division of same amongst the partners together with a Balance Sheet as on Dec 31, 2008.
[B. com (Hons) – Delhi Modified]
Solution
First, closing capital, i.e. on Dec 31, 2008 (of course, combined capital) has to be calculated. This can be done in the following form also instead of showing in the Balance Sheet Format (Statement of Affairs)
Stage I: Calculation of Capital as on Dec 31, 2008
X, Y and Z Capital as on Dec 31, 2008 | ||
---|---|---|
• |
All assets: |
Rs |
|
Cash at bank |
1,28,000 |
|
Debtors |
1,61,000 |
|
Stock |
2,36,000 |
|
Advance payments |
1,000 |
|
Machinery and plant |
57,600 |
|
Fixtures and fittings |
24,000 |
|
|
6,07,600 |
• |
Less: Liabilities: Creditors |
2,41,600 |
• |
Combined capital |
3,66,000 |
Stage II: Statement of Profit/Loss for the year 2008
Stage III:
XYZ Balance Sheet as of Dec 31, 2008
Remember
Following steps are necessary in preparing accounts for partnership firms under Single Entry System:
*1: |
Adjustments for appropriations (interest on capital, interest on drawings, etc.,) have to be made before net profit is to be apportioned amongst the partners (Ref: Step 7) |
*2: |
Balance Sheet or sometimes referred to as revised statement of affairs at the end of the accounting period has to be prepared with details. (Ref: Stage III) |
To ascertain gross profit and net profit of a business entity, it becomes essential to convert single entry records to double entry records.
Accounting procedure involved in the conversion of single entry into double entry is termed as Conversion Method or Final Accounts Method.
This involves lengthy and time-consuming process of journalising, posting balancing and preparing the trial balance. In practice, such a logical sequence of preparation of accounts is not feasible.
In practice, final accounts may be prepared from the available records and need not be relied entirely on Trial Balance. So figures relating to certain items may be prepared directly. If it cannot be done, such missing figures can be ascertained by preparing the respective ledger accounts.
Step 1: Lengthy process to ascertain the missing figures.
The following tabular column will help the students to ascertain the missing figures.
Missing Figure | Name of the Account to be Prepared | Method of Computing in the Missing Figure |
---|---|---|
1. Cash and bank balance (opening and closing) |
Cash/bank account summary |
Format of cash book is drawn, i.e. cash and bank account summary. All the figures (given in the question) are transferred to this account. Balancing figure – desired result |
2. Cash sales |
Cash/bank account summary |
Balancing figure – and cash sales = Total sales – Net credit sales |
3. Cash purchases |
Cash/bank account summary |
Balancing figure – and cash purchases = Total purchases – Net credit purchases |
4. Drawings |
Cash/bank account summary |
Balancing figure – i.e., preparation of cash and bank account summary alone will be sufficient |
5. Operating expenses |
Cash/bank account summary |
Balancing figure – i.e., preparation of cash and bank account summary alone will be sufficient |
6. Income received |
Cash/bank account summary |
Balancing figure – i.e., preparation of cash and bank account summary alone will be sufficient |
7. Additional capital |
Cash/bank account summary |
Balancing figure – i.e., preparation of cash and bank account summary alone will be sufficient |
8. Loan raised |
Cash/bank account summary |
Balancing figure – i.e., preparation of cash and bank account summary alone will be sufficient. |
9. Repayment of loan |
Cash/bank account summary |
Balancing figure – i.e., preparation of cash and bank account summary alone will be sufficient |
10. Collection from debtors |
Cash/bank account summary and total creditors account |
Balancing figure – + Total Debtors Account (balancing figure) |
11. Payments to creditors |
Cash/bank account summary and Bills Receivable account |
Balancing figure – + Total Creditors Account (balancing figure) |
12. Bills Receivable collected |
Cash/bank account summary and bills payable account |
Balancing figure – + Bill Receivable Account (balancing figure) |
Cash/bank account summary and bills payable account |
Balancing figure – + Bill Payable Account (balancing figure) |
|
14. Net credit sales |
Total debtors account |
Besides remember: (1). Net Credit Sales = Total Sales – Cash Sales – Sales Return |
15. Net sales |
— |
(2). Closing Debtors × 12/credit period (in months). Net sales = Cash Sales + Credit Sales – Sale Returns) (or) = Cost of Goods Sold + Gross Profit (or) = Gross Profit X 100/Rate of G.P. on sales |
16. Cost of goods sold |
Prepare stock account |
C.G.S = Opening Stock + Purchases + Direct Expenses – Closing Stock (or) = Net Sales – Gross Profit (or) = Prepare Stock account and from bal. fig. |
17. Gross – Profit |
— |
G.P. = Net Sales – C.G.S. (or) Net sales X Rate of G.P. / 100 |
18. Net credit purchases |
Prepare total creditors account |
Net Credit Purchases = Total Purchases – Cash Purchases – Purchases Returns (or) = Closing Creditors X 12 / Credit period |
19. Net purchases |
Stock account |
Net purchases = Cash Purchases + Credit Purchases – Purchases Returns (or) C.G.S + Closing Stock – Opening Stock |
20. Bills Receivables drawn |
|
Balancing figure |
21. B/P accepted |
|
Balancing figure |
22. B/R dishonoured |
|
Balancing figure |
23. Current years sales |
— |
Previous year’s sales ± Changes in sales price, sales quantity |
Revenue income account |
Income received + Accrued at the end + un accrued in the beginning – Accrued in the beginning – un accrued at the end |
|
25. Current years revenue expenses |
Revenue expenses account |
Expenses Paid + Outstanding at the end + Pre-paid in the beginning – outstanding in the beginning – Pre-paid at the end |
26. Opening capital |
Opening Balance Sheet |
Balancing figure |
27. Opening and closing balance of any other item |
Respective account has to be prepared |
Balancing figure |
Step 1: |
To ascertain capital in the beginning, Statement of Affairs in the beginning is to be prepared. Some needed items may be missing. So, at this stage, students are advised to prepare the Statement of Affairs as much as they can. By doing so, they may be able to come to know – what are all the figures missing. |
Step 2: |
This is the most important step. Prepare the cash book. |
Step 3: |
Prepare |
|
Gather the relevant figures from each such account. |
Step 4: |
Calculate total sales and total purchases |
Step 5: |
Besides the above-mentioned accounts, all the other accounts have to be prepared. As it is a lengthy and time-consuming process, only the most frequently needed items are dealt. (Any how students may refer the table presented to comprehend the accounting procedure involved in ascertaining the missing information) |
Step 6: |
Trial Balance is to be prepared. |
Step 7: |
From the Trial Balance, final accounts can be prepared in the usual manner. Under the conversion method, for preparing Trading Account, the following information must be made available. |
|
|
Preparation of these accounts is explained by way of illustration in the following pages:
Format of Cash Book
If both the sides of a cash book are not tallied then the difference in the sides (both) may be treated as one of the following items:
If credit side exceeds debit side | If debit side exceeds credit side |
---|---|
1. Opening cash balance (or) Opening bank balance (or) Closing bank overdraft |
1. Closing cash balance (or) Closing bank balance (or) Opening bank overdraft |
2. Cash sales |
2. Cash Purchases |
3. Collection from debtors |
3. Payment to creditors |
4. B/R collected |
4. B/P discharged |
5. Additional capital |
5. Drawings |
6. Sale of fixed asset |
6. Purchase of fixed asset |
7. Sundry Income |
7. Sundry Expenses |
Illustration: 9
From the following transactions, you are required to ascertain the missing figure by preparing cash book for the year 2008–2009; Collection from debtors Rs 60,000; Payment to creditors Rs 40,000; Bills Receivables collected Rs 20,000; Bills Payable discharged Rs 19,000; Cash sales deposited Rs 13,000; Cash purchases (by cheque) Rs 5,000; Capital introduced Rs 10,000; Drawings Rs 15,000; Commission received Rs 6,000; Wages paid Rs 20,000; Salaries paid Rs 12,000; Rent paid Rs 9,000; Insurance premium paid Rs 1,000; Carriage inwards Rs 1,000; Bank balance as on Apr 1, 2008 Rs 9,000. All the above transactions are made through cheque only.
Solution
Cash Book (Bank Column)
Illustration:10
Ascertain the opening stock from the given information:
Solution
Rate of G.P. on cost = 1/2. Given
∴1/2 on cost = 1/3 on sale]
Profi t made on sales |
= |
1/3 × Rs 90,000 |
|
= |
Rs 30,000 |
Purchases
To ascertain
(or)
(or)
(or)
Total creditors account has to be prepared.
Performa of Total Creditors Account
Illustration: 11
You are required to calculate total purchases from the following information:
Creditors as on Mar 31, 2009 Rs 4,000; creditors as on Mar 31, 2008 Rs 20,000; cash paid to creditors Rs 90,000; discount allowed by creditors Rs 3,000; purchase returns Rs 2,000; bills payable accepted Rs 15,000; cheques issued to creditors Rs 15,000; Bills Receivables endorsed in favour of creditors Rs 30,000 out of which 30% bills were dishonoured.
Solution
Total Creditors’ Account
Total Purchases |
= |
Cash Purchases + Credit Purchases |
|
= |
Rs 90,000 + Rs 1,30,000 |
|
= |
Rs 2,20,000 |
A part of payment may be made by way of bills to the creditors.
Bills payable is prepared to ascertain the figure relating to bills accepted in favour of creditors.
Format of Bills Payable Account
Illustration: 12
You are required to prepare Bills Payable A/c and ascertain the missing figure from the following information:
Bills payable as on 31.3.2008 Rs 5,000
Bills discharged Rs 27,000
Bills payable as on 31.3.2009 Rs 2,000
Bills Payable Account
(* This figure is transferred to creditors account and then the balancing figure is assumed as credit purchases)
Illustration: 13
You are required to calculate total purchases from the following information:
(B.Com, Delhi)
Solution
Step 1: Preparation of Bills Payable Account
Bills Payable Account
* This figure is to be transferred to total creditors account to ascertain credit purchases, another missing figure.
Step 2: Preparation of Total Creditors’ Account
Step 3: Total Purchases
|
Cash Purchases: |
Rs 51,600 |
|
Add: Credit Purchases: |
Rs 80,600 |
|
Total Purchases: |
Rs 1,32,200 |
Cash book reveals most of the direct expenses.
At times they need adjustments relating to outstanding and pre-paid expenses.
Like purchases, cash sales and credit sales have to be ascertained. Cash sales are shown in the cash book
Credit sales are computed by preparing
Performa – Total Debtors Account
Illustration: 14
From the following you are required to calculate total sales made during the year 2008.
Debtors as on Jan 1, 2008 Rs 30,600; cash received from debtors during the year (as per cash book) Rs 91,200; bad debts 3,600; cash sales (as per cash book) Rs 85,200; returns inwards Rs 8,100; by debtors as on Dec 31, 2008 Rs 41,400.
Solution
Step 1: Preparation of Total Debtors Account to Determine Credit Sales
Total Debtors Account
Step 2: Total Sales
|
Cash sales |
Rs 85,200 |
|
Add: Credit sales |
Rs 1,13,700 |
|
Total sales Rs |
1,98,900 |
Bills Receivable Account
Format – Bills Receivable Account
Illustration: 15
From the following details you are required to calculate total sales
Solution
Step 1: Preparation of Bills Receivable A/c
Bills Receivable Account
Step 2: Preparation of Total Debtor’s Account
Total Debtor’s Account
Step 3: Total Sales
Cash sales |
= |
Rs 30,000 |
Add: Credit sales |
= |
Rs 46,850 (*2) |
Total sales |
= |
Rs 76,850 |
Illustration: 16
You are required to determine the amount of sales from the data:
Stock in the beginning Rs 15,000; Purchases Rs 60,000; Stock at the end Rs 15,000; Rate of G.P. on Sale = 1/6
Solution
Notes
As such, first, from the available figures, gross profit has to be calculated. Then by transferring these data to Memorandum Trading Account, sales (balancing figure) can be ascertained.
Step 1: |
Calculation of Cost of Goods Sold: |
|
Cost of goods sold = Opening Stock + Purchases − Closing Stock |
|
= Rs 10,000 + 60,000 − 15,000 |
|
= Rs 55,000 |
Step 2: |
Calculation of Gross Profit |
|
1/6 on sales will be 1/5 on cost |
|
Gross profit on C.G.S = 1/5 × Rs 55,000 |
|
= Rs 11,000 *1 |
Step 3: |
Calculation of Sales |
|
(Preparation of Memorandum Trading Account) |
Memorandum Trading Account
To ascertain figure relating to expenses. Revenue expenses account has to be prepared, and the balancing figure represents the missing figure.
Format of Revenue Expenses Account
Model: Calculation of Missing Figure – Revenue Expenses
Illustration: 17
You are required to ascertain the missing figure from the following information:
31.3.2008 Rs | 31.3.2009 Rs | |
---|---|---|
Outstanding Rent |
500 |
1,200 |
Prepaid Rent |
1,500 |
3,000 |
Rent paid during the year 2008–2009 Rs 18,000.
Solution
Revenue Expense Account (Rent)
Actual expense incurrent during 2008–2009 for Rent Rs 17,200.
To ascertain the figures relating to income, Revenue Income Account has to be prepared and the balancing figure in that account reveals the missing figure for such items.
Format of Revenue Income Account
Model: Calculation of Missing Figure – Revenue Income
Illustration: 18
You are required to ascertain the appropriate missing figure from the following information:
33.3.2009 Rs | 31.3.2009 Rs | |
---|---|---|
Accrued interest |
5,500 |
9,250 |
Interest received in advance |
12,700 |
24,500 |
Interest received during the year Rs 75,000
Solution
Computation of interest
Revenue Income A/c – Interest
|
Interest received |
|
During 2008–2009: Rs 67,000. |
Illustration: 19
You are required to compute credit purchases and credit sales from the following information:
Solution
Credit Purchases can be ascertained by preparing Total Creditors Account.
Total Creditors Account
|
Credit purchases: Rs 62,000. |
|
Credit sales to be ascertained by preparing Total Debtors Account |
Note: As bad debts recovered, and bills receivables discounted will not affect Total Debtors Account, those items need not be included in Total Debtors Account.
Total Debtors Account
Credit sales: Rs 76,000.
Illustration: 20
Mr. Raichand keeps his accounts on single entry. You are required to ascertain total purchases during the year 2008.
B/P 1.1.2008 Rs 40,000; Creditors Rs 48,000; (1.1.2008), Creditors on 31.12.2008 Rs 32,000; Cash paid to the creditors Rs 2,41,600; Cash received from debtors Rs 2,00,000; Cash purchases Rs 2,06,400; Bills payable during the year Rs 71,200; Returns outwards Rs 9,600; Returns inwards Rs 56,000; Bills payable 31.12.2008 Rs 56,000.
(Delhi – B. Com – Modified)
Solution
Bills Payable Account
Now total creditors account is to be prepared
Total Creditors’ Account
* Credit Purchases: Rs 3,22,400
Total Purchases
Cash Purchases (Given): | Rs 2,06,400 |
Add: *Credit Purchases: | Rs 3,22,400 |
Total Purchases: | Rs 5,28,800 |
Illustration: 21
Mr. Praveen keeps his accounts on a single entry system. You are required to prepare Trading and Profit and Loss Account for the year ended 31.3.2009, together with Balance Sheet as on that date.
Cash Book Analysis Shows the Following
Further details
Provide 5% interest on Praveen’s capital balance as on 1.4.2008. Provide Rs 3,000 for doubtful debts, 5% depreciation on all fixed assets, 5% group incentive commission to staff has to be provided for net profit after meeting all expenses and commission.
[B. Com (Hons) – Delhi – Modified]
Solution
The missing figures have to be ascertained in the following sequence by preparing:
Step 1: Preparation of Cash Book
Cash Book
*1: Balancing figure – Credit side of Cash Book. This figure represents overdraft. This amount has to be shown in the opening Balance Sheet.
Step 2: Preparation of Opening Balance
Balance Sheet as on Apr 1, 2008
*2 Opening capital: Rs 70,000
Step 3: Preparation of Total Debtor’s Account
Total Debtors Account
*3 Sales: Rs 66,000
Total Sales: Cash sales + Credit sales: Rs 30,000 + Rs 66,000 = Rs 96,000
Step 4: Preparation of Total Creditors Account
Total Creditors Account
*4 Purchases: Rs 25,000
Step 5
Opening Capital = Rs 70,000
5% on Rs 17,000 = 5/100 × Rs 70,000 = Rs 3,500
(Note: First leave gap for this. After computing G.P. transfer that amount here and calculate)
|
Rs |
Gross Profit |
|
(From Trading and Profit and Loss A/c) |
73,440 |
Less: All expenses except Commission: |
41,100 |
(From Trading and P and L A/c) |
|
Net Profit before Commission |
32,340 |
Commission @ 5% |
1,540 |
Net Profit after Commission |
30,800 |
Step 6: Preparation of Trading and Profit and Loss Account
Trading and Profit and Loss Account for the year ending Mar 31, 2009
Step 7: Preparation of Balance Sheet
Balance Sheet as on Mar 31, 2009
(Comprehensive)
Illustration 22
Mr. X. carries on some business. He has no knowledge of double entry accounting. He banks all receipts and makes all payments only by means of cheques. He maintains proper cash book, a debtor’s ledger and creditor’s ledger. He also makes proper records of assets and liabilities at the closing of every accounting year. From such records, the following facts are collected for the year 2008:
Receipt for the year ended 31.12.2008:
|
Rs |
From Sundry Debtors |
35,250 |
Cash Sales |
8,250 |
Paid in by Mr. X |
5,000 |
Payments made during the year:
New Equipment Purchases |
1,250 |
Wages |
13,450 |
Interest Paid |
150 |
Rent |
2,400 |
Sundry Expenses |
4,250 |
Paid to Sundry Creditors |
15,250 |
Drawings |
3,000 |
Salaries |
2,250 |
Telephone |
250 |
Electricity Charges |
950 |
Assets and liabilities:
31.12.2007 Rs | 31.12.2008 Rs | |
---|---|---|
Sundry Creditors |
5,050 |
4,800 |
Sundry Debtors |
7,000 |
12,250 |
Bank |
1,250 |
? |
Stock |
12,500 |
6,250 |
Equipment |
15,000 |
14,630 |
You are required to prepare Trading and Profit and Loss Account for the year ending Dec 31, 2008 and a Balance Sheet on that date.
[B.Com. (Hons) – Delhi Modified]
Solution
Order of Sequence
Step 1: Preparation of Cash Book (with bank columns only)
Cash Book (Bank Column only)
Bank balance as on Dec 31, 2008: Rs 6,550
Step 2: Preparation of Balance Sheet (Opening)
Balance Sheet as on Dec 31, 2007
Opening capital = Rs 31,200
Step 3: Calculation of Depreciation on Equipment
Equipment A/c
Depreciation = Rs 1,620
Step 4: Calculation of Credit Purchases
Total Creditor’s Account
Credit Purchases = Rs 15,000
Step 5: Calculation of Credit Sales
Total Debtors Account
Credit Sales = Rs 40,000
Step 6: Preparation of Trading and Profit and loss Account to Compute Gross Profit and Net Profit
Trading and Profit and Loss Account for the year ending on Dec 31, 2008
Step 7: Preparation of Balance Sheet
Balance Sheet as on Dec 31, 2008
Illustration: 23
Mr. Raj carries on business as a retail merchant. He does not maintain regular books. From cash sales effected by him he effects business and other payments, always retains cash of Rs 500 on hand and deposits the balance in the bank account. The stock inventories for the year ended Dec 31, 2008 are lost. However he informs you that he has sold goods invariably at a price which yields him a profit of 33 1/3% on cost. From the following additional information supplied to you, prepare necessary final accounts for the year ended Dec 31, 2008.
Assets and Liabilities | Jan 1, 2008 Rs | Dec 31, 2008 Rs |
---|---|---|
Cash in hand |
500 |
500 |
Sundry Creditors |
2,000 |
4,500 |
Cash at |
Not available |
4,000 |
Sundry Debtors |
5,000 |
17,500 |
Stock of Goods |
14,000 |
Not available |
Analysis of the bank pass book reveals the following information:
|
Rs |
Payment of Creditors |
35,000 |
Payment for bussiness expenses |
6,000 |
Receipt from Debtors |
37,000 |
Loan from Gopi taken on Jan 1, 2008 @ 10% |
5,000 |
Cash Deposited in the bank |
5,000 |
In addition, he paid to the creditors for goods Rs 1,000 in cash and salaries Rs 2,000 in cash. He also withdrew Rs 4,000 cash for his personal expenses.
(B. Com. Madras Modified)
Solution
Step 1: Calculation of Cash Sales:
Cash Book (Cash Column)
Cash sales = Rs 12,000.
Step 2: Calculation of Opening Bank Balance
Cash Book (Bank column only)
Bank balance as at 1.1.2008: Rs 2,500
(As Cr. – it is overdraft)
Step 3: Note: Step 1 and Step 2 can be presented in a combined ledger A/c
Total Creditors Account
Credit Purchases: Rs 38,500
Step 4
Total Debtors Account
Credit Sales: Rs 50,000
Step 5: Calculation of Opening Capital
Balance Sheet as on 1.1.2008
Step 6: Preparation of Final Account
Raj Trading and Profit and Loss Account for the year ending 31.12.2008
Illustration: 24
You are given below:
(i) Assets of Mr. Krishna:
Bills Receivable Rs 12,500; Sundry Debtors Rs 19,500; Stock in trade Rs 37,650; Plant and Machinery Rs 23,500; Land and Buildings Rs 35,000; Cash in hand Rs 350
Liabilities:
Bank O/D Rs 2,500; Sundry Creditors Rs 18,000; Bills Payable Rs 8,000.
(ii) Cash Transaction:
Receipt from debtors Rs 1,45,000; Bills Receivable encashed Rs 50,000
Payments: Salaries Rs 6,000; Wages Rs 7,900; Bills Payable Rs 71,500; Payment to Creditors Rs 73,500;General Expenses Rs 4,000; Drawings Rs 22,500; Cash in hand at the end Rs 1,200.
(iii) Other Information:
Create provision for doubtful debts on debtors at the end @ 5%. Depreciate plant @ 5% and building @ 2 1/2%.
You are required to prepare a trading and profit and loss account for the year ended Mar 31, 2009 and a Balance Sheet on that date.
(B. Com. – Bombay – Modified)
Step 1: Calculation of Capital in the Beginning
Step 2
Total Debtors Account
Step 3
Bills Receivable Account
Step 4
Total Creditors Account
Step 5
Bills Payable Account
Step 6
Cash Account
Step 7
Trading and Profit and Loss Account for the year ending Mar 31, 2009
Step 8
Balance Sheet as on Mar 31, 2009
Illustration: 25
Mr. Khan commenced business in retail on July 1, 2008 in premises for which he paid a rent of Rs 1600 per month. The only records he kept, apart from his bank statements, were files of paid invoices and unpaid invoices for goods purchased, together with a notebook in which he record a few sales on credit to special customers who paid him by cheques. Cash received from cash sales was paid into the till out of which he had paid certain amounts, of which he kept a rough record, and he made weekly banking out of the balance in the till. He paid all suppliers for goods purchased by cheque.
An analysis of the bank statements for the six months ended Dec 31, 2008 was as follows:
Mr. Khan estimates that the total amounts paid out of the till before making the weekly banking for the six months were:
Drawings Rs 16,000; wages Rs 11,200 and Sundry Shop Expenses Rs 6,400.
You ascertain that as on Dec 31, 2008:
You are required to prepare the Balance Sheet as on Dec 31, 2008 and Trading and Profit and Loss Account for the half year ended on that date.
(B. Com. Madras)
Solution
Note: This is a different and typical problem
Step 1: Computation of Cash Sales:
|
|
Rs |
Total of Weekly Cash bankings |
|
95,440 |
Add: All payments paid out of till |
|
|
|
Rs |
|
Drawings |
16,000 |
|
Wages |
11,200 |
|
Shop expenses |
6,400 |
33,600 |
Balance on hand |
|
2,080 |
|
|
1,31,120 |
Less: Sales of surplus shop fittings |
|
|
Included in weekly bankings |
|
2,400 |
Total Cash sales |
|
1,28,720 |
Step 2: Computation of Sales to Special Customers:
|
Rs |
Cheques received from special customers and banked |
2,400 |
Add: Cheques received from special customers paid in but not collected |
1,360 |
Amount due from special customers |
1,920 |
Total sale to special customers |
5,680 |
(Note: Sale to special customers is similar to credit sale in ordinary transactions)
So Total sales |
= |
Cash sales + Sale to special customers |
|
= |
Rs 1,28,720 + 5,690 |
|
= |
Rs 1,34,400 |
Step 3: Calculation of Purchases
|
Rs |
Payment to suppliers (i.e., Purchases) |
78,720 |
Add: Unpaid invoices |
17,920 |
Purchases |
96,640 |
Step 4: Calculation of Bank Balance as per Cash Book
|
Rs |
Balance as per pass book |
25,520 |
Add: Cheques paid in but not credited |
1,360 |
|
26,880 |
Less: Cheques issued but not yet presented for Payment
Rent |
1,600 |
|
Lighting |
1,200 |
2,800 |
Bank blance as per Cash Book |
|
24,080 |
Note: The cheque in the till is a post dated cheque and treated as cash. As such it is not taken into account, in the adjustment here.
Step 5: The cheque for Rs 800 received from a special customer is not treated as bad debts bluntly. Here, while preparing final accounts a provision is made for that amount. The same may be treated as written off for the next accounting period.
[Special Note: Students are asked to be thorough with bank transactions as given in this question.]
Step 6: Preparation of Trading and Profit and Loss A/c
Trading and Profit and Loss Account for the year ending Dec 31, 2008
Step 7
Balance Sheet as on Dec 31, 2008
Incomplete Records: Accounting records that are not being maintained strictly on the basis of Double Entry System. This is also known as Single Entry System.
Conversion Method: A method to convert books of accounts maintained on single entry into Double Entry System.
Statement of Affairs: A statement enlisting items of assets and liabilities in order to determine the capital in the beginning and at the end of an accounting period.
Statement of Affairs Method: The method to determine profit/loss from incomplete records. This is also known as net worth method or capital comparison.
S.P. Iyengar, “Advanced Accountancy,” Sultan Chand and Sons, New Delhi.
R.L. Gupta and M. Radhasamy, “Advanced Financial Accounting,” Sultan Chand and Sons, New Delhi, 2008.
P.C. Tulsian, “Financial Accounting,” Pearson Education, New Delhi, 2004.
I State whether the following statements are True or False
Answers
1. False | 2. False | 3. True | 4. False | 5. True |
6. True | 7. False | 8. True | 9. False | 10. False |
11. True | 12. False | 13. True | 14. False | 15. True |
16. True | 17. True | 18. False | 19. False | 20. True |
II Choose the Correct Answer
Answers
III Fill in the blanks with suitable words
Answers
Model: Calculation of Capital:
1. Calculate the Capital of Mr. Vasudev as on Mar 31, 2009 for the following information:
Answer: Rs 10,00,000
Model: Calculation of Profit/Loss:
2. Opening capital Rs 70,000; Capital introduced during the year Rs 15,000; Drawings Rs 5,000; Closing Capital Rs 1,00,000. Calculate Profit/Loss for the year.
Answer: Profit Rs 20,000
3. Opening capital Rs 1,50,000; Additional Capital introduced Rs 30,000; Drawings Rs 10,000; Closing Capital Rs 1,60,000. Compute Profit/Loss for the year.
Answer: Loss Rs 10,000
4. Calculate the missing figure:
|
Assets |
Rs 93,000 |
|
Liabilities |
Rs 53,000 |
|
Capital |
Rs ? |
5. Calculate the missing figure:
|
Opening capital |
Rs 1,80,000 |
|
Drawings |
Rs 2,500 per month |
|
Addition capital |
Rs 35,000 |
|
Closing capital |
Rs 2,40,000 |
|
Profit/Loss ? |
|
|
Answer: Profit Rs 55,000 |
|
6. Calculate the missing figure:
|
Capital in the beginning |
Rs 15,000 |
|
Profits made during the year |
Rs 6,000 |
|
Capital at the end |
Rs 39,000 |
|
Additional capital or drawing: |
Rs ? |
|
Answer: Capital addition Rs 18,000; drawings NIL |
|
7. Calculate the missing figure:
|
Capital at the end |
Rs 48,000 |
|
Capital introduced during the year |
Rs 12,000 |
|
Profit made during the year |
Rs 14,400 |
|
Drawings |
Rs 7,200 |
|
Capital in the beginning |
Rs: ? |
|
Answer: Rs 28,800 |
|
8. Calculate the missing figure:
|
Capital at the end |
Rs 9,100 |
|
Capital introduced |
Rs 2,350 |
|
Loss |
Rs 700 |
|
Drawings |
Rs 1,400 |
|
Capital in the beginning |
Rs: ? |
|
Answer: Rs 8,850 |
|
9. Calculate the missing figure:
|
Capital in the beginning |
Rs 12,000 |
|
Profit made during the year |
Rs 2,000 |
|
Drawings |
Rs 4,000 |
|
Capital introduced |
Rs 6,000 |
|
Capital at the end |
Rs: ? |
|
Answer: Rs 16,000 |
|
10. Calculate the missing figure:
|
Capital in the beginning |
Rs 35,000 |
|
Capital at the end |
Rs: 36,400 |
|
Loss made during the year |
Rs 2,800 |
|
Drawings |
Rs 5,600 |
|
Additional capital introduced during |
Rs 6,000 |
|
the year: |
Rs ? |
|
Answer: Rs 9,400 |
|
Model: Preparation of Statement of Profit/Loss
11. Mrs. Shiva commenced business on Apr 1, 2008 with a capital of Rs 60,000. On the same day she purchased fixtures and furniture for Rs 12,000. On Sep 30, she borrowed Rs 30,000 from her husband @ 9% p.a. (interest not yet paid) and introduced a further capital of Rs 9,000. She withdrew @ Rs 1,800 p.m. for household expenses.
On Mar 31, 2009, her position stood at: cash in hand Rs 16,800; Sundry Debtors Rs 28,800; Stock Rs 40,800; Bills Receivable Rs 9,600; Sundry Creditors Rs 3,000; owing for rent Rs 900; Furniture and fixtures are to be depreciated by 10%.
You are requested to compute Profit/Loss made by Mrs. Shiva during 2008–2009.
Answer: Rs 25,350
12. Mr. Dev commenced a business with Rs 60,000 on Apr 1, 2008. During the year he invested a further sum of Rs 25,000 and withdrew Rs 1,000 per month for personal expenses.
His assets and liabilities as on Mar 31, 2009:
Rs | |
---|---|
Cash in hand |
12,000 |
Bank Overdraft |
20,000 |
Loan (Dr.) |
17,500 |
Stock |
16,500 |
Bills Receivable |
20,000 |
Bills Payable |
18,000 |
Sundry Debtors |
25,000 |
Sundry Creditors |
8,500 |
Machinery |
20,000 |
Outstanding Expenses |
800 |
Further it was decided to depreciate machinery @ 10% and provide doubtful debts @ 5% on debtors.
You are required to ascertain profit/loss for the year ended Mar 31, 2009.
Answer: Net loss: Rs 12,550
13. Mr. Balaji commenced business on Jan 1, 2008 with a capital of Rs 96,000. He purchased furniture and fixtures for Rs 24,000. During the year he withdrew Rs 1,600 per month to meet the hostel expenses of his son. He invested Rs 12,800 on Jan 15, 2008. On Dec 31, 2008 his financial position stood at:
Rs | |
---|---|
Cash in hand |
2,400 |
Cash at bank |
25,000 |
Sundry Debtors |
42,400 |
Stock |
44,800 |
Bills Receivable |
19,200 |
Sundry Creditors |
6,400 |
Outstanding Expenses |
800 |
Depreciate furniture and fixtures by 10%. Compute Profit/ Loss made by Mr. Balaji during 2008.
Answer: Profit Rs 59,200
14. Mr. S. commenced business on Jan 1, 2008 with a capital of Rs 2,00,000 and bought furniture and fixtures for Rs 40,000. On June 30, 2008 he borrowed Rs 1,00,000 from his friend at 12% p.a. (interest not yet paid) and introduced additional capital of Rs 30,000. He withdrew Rs 6,000 p.m. for household expenses.
On Dec 31, his position was as:
Cash in hand Rs 4,000; Cash at bank Rs 52,000; Sundry Debtors Rs 96,000; Stock Rs 1,00,000; Bills Receivable Rs 32,000; Sundry Creditors Rs 10,000; Owing for rent Rs 3,000; Furniture and fixtures are to depreciated at 10%. Compute the capital and Profit/Loss during 2008
Delhi – B.Com (Pass)
Answer: Capital Rs 2,01,000; Profit Rs 43,000
15. Mr. Patel does not maintain double entry books of accounts. From the following details determine the profits for the year and statement of affairs at the end of the year.
1.1.2008 Rs | 31.12.2008 Rs | |
---|---|---|
Stock |
80,000 |
1,20,000 |
Debtors |
60,000 |
80,000 |
Cash |
4,000 |
2,000 |
Bank |
20,000 |
10,000(O.D.) |
Creditors |
30,000 |
50,000 |
Outstanding Expenses |
10,000 |
16,000 |
Furniture (cost) |
6,000 |
4000 |
Furniture Rs 2,000 (cost) was sold for Rs 10,000 on 1.11.2008. Ten percent depreciation is to be charged on furniture. Mr. Patel has drawn Rs 2,000 per month. Rs 4,000 was invested by Mr. X in 2008.
Bank balance on 1.1.2008 is as per cash book. But the bank overdraft on 31.12.2008 is as per bank statement. Rs 4,000 cheques drawn in Dec 2008 have not been encashed within the year.
[B.com (Madras) Modified]
Answer: Opening Capital Rs 1,30,000; Closing Balance Rs 1,26,000; Net Profit Rs 15,600
16. Mr. Mukerjee had Rs 1,50,000 in bank on Jan 1, 2008 when he started his business. He closed his accounts on Mar 31, 2009. His single entry books (in which he did not maintain any account for the bank) showed his position as follows:
31.3.2008 Rs | 31.3.2009 Rs | |
---|---|---|
Cash in hand |
1,000 |
1,500 |
Stock in trade |
9,500 |
14,500 |
Debtors |
500 |
1,000 |
Creditors |
2,500 |
1,500 |
On Feb 1, 2008 he began drawing Rs 350 p.m. for his personal expenses from the cash box of the business. His account in the bank had the following entries.
Deposits Rs | Withdrawals Rs | |
---|---|---|
1.1.2008 |
1,50,000 |
— |
1.1.2008 to 31.3.2008 |
— |
1,11,500 |
1.4.2008 to 31.3.2008 |
1,11,500 |
1,35,000 |
The above withdrawals include payment by cheque of Rs 1,00,000 and Rs 30,000, respectively, during the periods from Jan 1, 2008 to Mar 31, 2008 and from Apr 1, 2008 to Mar 31, 2009 for the purchase of machinery for the business and the deposits after Jan 1, 2008 consisted wholly of sale price received from customers by cheque.
You are required to draw up his statement of affairs as at Mar 31, 2008 and Mar 31, 2009, respectively, and compute his profit or loss for the year ended Mar 31, 2009.
(C. S. Modified)
Answer: |
Capital as on 31.3.2008 |
Rs 1,47,000 |
|
Capital as on 31.3.2009: |
Rs 1,64,000 |
|
Profit earned: |
Rs 21,200 |
|
(depreciation is yet to be adjusted) |
|
Model: Partnership (Single Entry)
17. Vasu and Doss started business on Jan 1, 2008 with Rs 1,00,000 as capital contributed equally but the profit sharing ratio was 3:2. Their drawings were Rs 600 and Rs 400 per month, respectively. They had kept no account except the following information:
31.12.2007 Rs | 31.12.2008 Rs | |
---|---|---|
Machinery at cost |
40,000 |
50,000 |
Stock in trade |
60,000 |
60,000 |
Debtors |
1,00,000 |
1,20,000 |
Cash |
4,000 |
1,000 |
Creditors |
60,000 |
40,000 |
Outstanding Expenses |
8,000 |
6,000 |
Bank balance (as per pass book) |
12,000 |
16,000 |
Provision is to be made for depreciation @ 10% on cost of machinery as on the end of the each year. Debtors on 31.12.2008 include Rs 10,000 for goods sent out on consignment at 25% above cost and were not sold until 2008.
A cheque for Rs 2,000 has been deposited on 31.12.2008 but was credited on 2.1.2008. A cheque of Rs 4,000 issued on 26.12.2008 was presented on 3.1.2009. A cheque for Rs 2000 was directly deposited by a customer on 27.12.2008 and a cheque for Rs 1,000 deposited in Dec 2008 was dishonoured. No adjustment for these was made.
Determine the Profits for 2007 and 2008 and draw up a Balance Sheet as on Dec 31, 2008
(C.A. Inter Modified)
Answer: |
Capital as on 31.12.2007 |
Rs 1,44,000 |
|
Capital as on 31.12.2008 |
Rs 1,87,000 |
|
Profit for the year 2008 |
Rs 33,600 |
|
Profit for the year 2008 |
Rs 33,000 |
18. X and Y carrying on business in partnership and sharing profits and losses in the ratio of 2:1 had the following balances to the credit of their accounts in the books of the firm as on Dec 31, 2007:
X: Rs 1,72,500 | |
Y: Rs 90,000 |
A statement of affairs prepared on Dec 31, 2008, disclose the following position of business:
During the year X had drawn Rs 49,500 from the firm. He had also taken for his personal use goods worth Rs 6,000. He had sold some goods of the business for Rs 13,500 and retains the money himself. He had personally paid to some of the employees of the firm Rs 29,750 towards their salaries which he was entitled to be reimbursed.
Y had withdrawn Rs 18,750 in cash and also taken for his personal use goods worth Rs 3,750. He had paid towards some expenses of the firm for Rs 12,000 his private estate.
Prepare a statement showing profit of the firm for the year ending Dec 31, 2008 as well as Balance Sheet of the firm as on that date.
Answer: |
Net profit: Rs 30,000 |
|
Balance Sheet: Total: Rs 3,69,750 |
19. A retail trader keeps his books on single entry system. His assets and liabilities on Jan 1 and on Dec 31, 2008 are as follows:
During the year he had drawn out of the business Rs 18,000. Of this sum, Rs 8,100 had been spent by him for purchasing a delivery van for the business.
Prepare a statement showing his profit for the year and a statement of affairs as on Dec 31, 2008 after writing off 10% depreciation on furniture and fittings and providing 10% reserve on sundry debtors for bad debts and salary outstanding Rs 600.
(B.Com – Andhra Modified)
Answer: Net Loss: Rs 10,479; Capital at the end: Rs 16,941.
20. A trader has not kept proper books of account. From the following balances prepare a statement of gross profit and net profit for the year ended 31.3.2009.
Drawings during the year amounted to Rs 3,000. Depreciate land and buildings @ 2% and furniture and fittings @ 5%. Provide for doubtful debts @ 2 1/2 %.
(B. Com. Osmania Modified)
Answer: Gross profit: Rs 8,650; Net profit: Rs 7,518
Model: Conversion Method
21. Calculate the cost of goods sold in each of the following alternative cases:
Answers:
Model:
22. Calculate the sales in each of the following alternative cases:
|
Answer: |
Rs 42,000 |
|
|
Rs 56,000 |
|
|
Rs 52,500 |
|
|
Rs 33,600 |
|
|
Rs 31,500 |
23. Calculate the sales:
Answer:
24. Calculate the amount of sales in each of the following alternative cases:
Answer:
25. Calculate the amount of purchases in each of the following alternative cases:
Answer:
26. Calculate the amount of purchases in each of the following alternative cases:
Answer:
Model: Stock as the end
27. Calculate the stock at the end in each of the following alternative cases:
Answer:
28. Calculate the stock at the end
Answer: Rs 10,000
Model: Stock in the beginning
29. Calculate the stock in the beginning
Answer: Rs 20,000
30. Calculate the stock in the beginning in each of the alternative cases:
|
Answers: |
Rs 10,000 |
|
|
Rs 22,000 |
|
|
Rs 24,000 |
|
|
Rs 52,800 |
31. Calculate Sales
|
|
Rs |
|
Opening Debtors |
12,500 |
|
Closing Debtors |
20,000 |
|
Opening B/R |
5,000 |
|
Closing B/R |
2,500 |
|
Cash received from |
|
|
Debtors (including cash from B/R 5,000) |
25,000 |
Answer: Sales: Rs 30,000
32. Calculate Total Sales made during the year 2008.
Answer: Rs.1,44,150
Model: Bills Receivable – computation of
33. Compute the Bills Receivable drawn:
|
|
Rs |
|
Bills Receivable |
|
|
as on 31.12.2007 |
45,000 |
|
as on 31.12.2008 |
69,000 |
|
Bills endorsed to Creditors |
12,000 |
|
Bills dishonoured (including Rs bills endorsed to creditors) |
15,000 |
|
Bills collected |
45,000 |
Answer: Bills Receivable drawn: Rs.90,000
34. Calculate the Bills Received from Customers:
|
Bills Receivable collected, i.e. honoured |
80,000 |
|
Opening Balance of Bills Receivable |
1,50,000 |
|
Bills Receivable endorsed in favour of creditors |
20,000 |
|
Bills Receivable dishonoured |
10,000 |
|
Closing Balance of Bills Receivable |
2,00,000 |
Answer: Rs 1,60,000
Model: (B/R and Total Debtors)
35. You are required to prepare Bills Receivable account and total debtors’ account for the year ended 31.12.2008:
|
|
Rs |
|
Total Debtors on 1.1.2008 |
1,08,000 |
|
Bills Receivable on 1.1.2008 |
30,000 |
|
Sales (including cash sales of Rs 60,000) |
9,00,000 |
|
Cash received from Debtors |
6,00,000 |
|
B/R on 31.12.2008 |
45,000 |
|
Returns Inwards |
45,000 |
|
Discount allowed to Debtors |
30,000 |
|
Bad debts written off |
9,000 |
|
B/R endorsed to creditors |
30,000 |
|
Cash received on B/R matured |
45,000 |
Answer: B/R received during the year Rs.90,000; Closing debtors: Rs.1,74,000
36. You are required to prepare the total debtors account and Bills Receivable account from the following information for the year ending on Dec 31, 2008
|
|
Rs |
|
Debtors as on 1.1.2008 |
12,000 |
|
Debtors as on 31.12.2008 |
14,400 |
|
B/R as on 1.1.2008 |
1,500 |
|
B/R as on 31.12.2008 |
1,600 |
|
Discount allowed: |
500 |
|
Bad debts |
600 |
|
Total Sales |
96,000 |
|
Cash sales 10% of total sales |
– |
|
B/R dishonoured |
100 |
|
900 |
|
|
B/R dishonoured with Banker before maturity |
|
|
(Discount Rs 50) |
– |
|
B/R endorsed to creditors |
400 |
Answer:
37. Prepare Total Creditors Account and Bills Payable Account from the following information for the year ended Mar 31, 2009:
|
|
Rs |
|
Creditors as on 1.4.2008 |
70,000 |
|
Creditors as on 31.3.2009 |
1,33,600 |
|
B/P as on 1.4.2008 |
12,000 |
|
B/P as on 31.3.2009 |
15,750 |
|
Discount received |
8,800 |
|
Bills Discharged |
12,750 |
|
Total Purchases |
5,28,000 |
|
Cash purchases 25% of Total purchases; |
|
Answer:
Model: Credit Purchases and Net Purchases
38. Compute credit purchases and net purchases from the following:
Answer:
Model: Net Purchase and Net Sales
39. Calculate net purchases and net sales from:
Answer:
Model: Credit Sales and Credit Purchases
40. Compute Credit Sales and Credit Purchases from the following particulars for the year ending on Dec 31, 2008:
Answer: Credit sales: Rs. 45,900; Credit purchases: Rs.41,604
Model: Net Sales, Net Purchase and Closing Stock
41. Calculate Net Sales, Net Purchases and Closing Stock from the following information:
Particulars | 1.4.2008 Rs | 31.3.2009 Rs |
---|---|---|
Debtors |
31,800 |
326,500 |
Creditors |
24,000 |
16,000 |
Bills payable |
21,000 |
29,000 |
Stock in trade |
10,000 |
? |
Bills Receivable |
8,800 |
7,000 |
Transactions during the year:
Discount allowed to customers Rs 1,000; Discount allowed by the suppliers Rs 800; B/P discharged Rs 35,600; B/R collected Rs 20,900; Returns inwards Rs 8,700; Returns outwards Rs 4,800; Bad debts Rs 2,800; B/R dishonoured Rs 1,800; Cash paid to the creditors (including Rs 1,000 paid for purchase of fixed assets) Rs 1,21,000; Cash received from debtors (including Rs 500 recovered; written as bad debt in 2007–2008) Rs 69,500; Cash sales Rs 40,900; Cash purchased Rs 1,03,200; Gross Profit 20% on sales:
Answer: Net Sales: Rs 1,27,500; Net Purchases: Rs 2,59,600; Closing Stock: Rs 1,67,600
Model: Comprehensive Questions:
42. Shri. Vas Dev keeps his books on single entry system. From the following particulars prepare Trading and Profit and Loss Account and the Balance Sheet for the year ended Dec 31, 2008.
On 1.1.2008 his assets and liabilities were as follows: Stock Rs 75,000; Sundry Debtors Rs 90,000; Machinery Rs 90,000; Furniture Rs 7,500; Sundry Creditors Rs 45,000; Bank overdraft Rs 15,000;
The cash book gives the following information:
Discount allowed to debtors Rs 6,000; Discount earned from creditors was Rs 3,750; Goods worth Rs 4,500 were returned by customers and goods worth Rs 2,250 were returned to suppliers.
On Dec 31, 2008, his position was as follows:
Stock Rs 67,500; Sundry Debtors Rs 1,05,000; Bills Receivable Rs 9,000; Bills payable Rs 6,000; Machinery Rs 90,000; Furniture Rs 7,500; Sundry Creditors Rs 37,500; Salary outstanding Rs 750;
Depreciate Machinery @ 10% and furniture @ 6%.
(B.Com – Madurai-Kamaraj – Modified)
Answer:
43. Mr. Vasanth Reddy whose accounts are recorded by single entry only with Rs 10,000 lent by his wife and Rs 20,000 of his own; acquired a retail business of which he took possession on Apr 1, 2008.
Of the acquisition price Rs 7,500 was attributed to goodwill; Rs 2,500 to furniture, fixtures; Rs 17,500 to stock and Rs 2,500 was retained as working capital of which Rs 2,000 was paid into the bank. During the year his takings amounted to Rs 1,15,000 of which Rs 1,09,000 was paid into the bank, the remainder being in part utilised for cash payments. The payments out of the bank and cash during the year were:
|
Purchases |
78,000 |
|
Salary |
2,500 |
|
Wages |
8,200 |
|
Trade Expenses |
3,600 |
|
Rent, Rates and Taxes-Business |
2,960 |
|
Personal |
1,480 |
|
Payments to Domestic use |
1,200 |
|
Drawings |
12,000 |
At the close of the year his stock was of the value of Rs 18,750; He owned Sundry creditors for goods Rs 6,750; there was an owing to him for goods sold Rs 7,500; The balance at the bank was Rs 2,750.
Provide 5% for depreciation on furniture, fittings; interest @ 5% p.a. on his wife’s loan. Rs 500 for doubtful debts. Prepare the necessary final accounts for the year ending on Mar 31, 2009 and the Balance Sheet as on that date.
(B.Com – Madras – Modified)
Answer:
44. Mrs. Renu is a retail trader dealing with software components. She follows the practice of paying creditors for goods purchased through her Bank Account and making payments in cash on all nominal accounts.
Apr 1, 2008 Rs | Mar 31, 2009 Rs | |
---|---|---|
Cash in hand |
300 |
500 |
Cash at Bank |
10,000 |
15,000 |
Sundry Debtors |
17,500 |
25,000 |
Sundry Creditors |
34,100 |
37,500 |
Investments |
62,500 |
62,500 |
Stock |
25,000 |
18,700 |
Transactions during the year:
Salaries paid Rs 15,000; General expenses paid Rs 35,000; Payment for e-mail services Rs 8,700; Payment for Rent and Rates Rs 7,000; Electricity charges Rs 2,500; Cash receipts from Debtors Rs 3,12,500; Payments to Creditors through Bank and of Trade expenses in cash Rs 2,00,000; Payments into the bank business Rs 1,87,500; Payment into Bank – Additional capital Rs 2,500; Payment from Bank Account – Personal Rs 32,500; Cash Payments – Personal Rs 9,100; Stock taken for personal use Rs 1,400.
You are required to prepare trading and profit and loss account for the year ended Mar 31, 2009 and Balance Sheet of Mrs. Renu as on Mar 31, 2009.
(B.Com – Delhi – Modified)
Answer:
|
Hint: |
Bank A/c (Balancing figure Crs): 1,52,500 |
|
|
Cash A/c Trade expenses: Rs.47,500 |
|
|
Credit purchases: Rs.1,55,900 |
|
|
Credit sales: Rs.3,20,000 |
45. You are required to prepare the final accounts of a trader from the following information:
Assets and Liabilities:
1.1.2008 Rs | 31.12.2008 Rs | |
---|---|---|
Furniture |
18,000 |
19,050 |
Stock |
24,000 |
21,000 |
Debtors |
48,000 |
? |
Creditors |
33,000 |
45,000 |
Prepaid Expenses |
1,800 |
2,100 |
Outstanding Expenses |
6,000 |
5,400 |
Cash in hand and at bank |
3,600 |
1,875 |
Cash transactions during the year 2008:
|
Receipts from Debtors (after allowing 2 1/2% discount) |
1,75,000 |
|
Bills Receivable discounted (at an average rate of 2%) |
18,375 |
|
Paid to Creditor (@ 2% discount) |
1,17,600 |
|
Freight inward |
9,000 |
|
Drawings |
21,000 |
|
Furniture purchased |
3,000 |
|
28,800 |
|
|
Expenses including salary |
43,500 |
|
Miscellaneous receipts |
1,500 |
During the year Bills Receivable received were Rs 30,000; Rs 6,000 of which are endorsed in favour of creditors, of the later a bill for Rs 1,200 was dishonoured.
Goods costing Rs 2,700 were used for advertising materials
Goods are invariably sold to show a profit of 50% on cost
Difference in cash, if any, is to be treated as drawings or introduction of capital.
Provision for doubtful debts is to be provided @ 2 1/2% on debtors.
Answer: Gross Profit Rs 73,050; Net Profit Rs 23,966; Balance Sheet total Rs 1,35,566
(Hint: Prepare cash book – Rs 25,800 – Balancing figure)
Debtors account: Rs 58,350 (B.F)
Creditors account: Rs 1,36,800 (B.F)
Opening capital: Rs 56,400)
46. The following balances are available from the books of a trader as on Dec 31, 2007 and 2008.
31.12.2007 Rs | 31.12.2008 Rs | |
---|---|---|
Building |
1,20,000 |
1,20,000 |
Equipments |
2,40,000 |
2,68,000 |
Furniture |
20,000 |
20,000 |
Debtors |
? |
96,000 |
Creditors |
64,000 |
? |
Stock |
? |
68,000 |
Bank loan |
40,000 |
32,000 |
Cash |
64,000 |
44,000 |
Transactions during the year ended Dec 31, 2008 were:
|
|
Rs |
|
Collection from Debtors |
3,72,000 |
|
Payment to Creditors |
2,44,000 |
|
Cash Purchases |
64,000 |
|
Expenses |
40,000 |
|
Sale of one equipment on 1.7.2008 (Book value Rs 20,0000) |
12,000 |
|
Drawings |
40,000 |
Cash sales amounted to 10% to total sales. Credit sales amounted to Rs 3,60,000. Credit purchases 80% of total purchases. The trader sells goods at cost plus 33 1/3% discount allowed by suppliers Rs 4,000.
Equipments and furniture are to be depreciated by 10% p.a. and buildings @ 2%. New equipment was purchased on 1.7.2008.
Prepare the final accounts for the year 2008.
Answer: Gross Profit Rs 1,00,000; Net Profit Rs 27,200; Balance Sheet total: Rs 5,87,200
(Hint: Opening capital Rs 4,96,000)
Total Debtors A/c (balancing figure): Rs 3,60,00
Total Creditors A/c (balancing figure): Rs 72,000
47. The following is the Balance Sheet of Mr. Raghu as on Mar 31, 2007.
A riot occurred on Mar 31, 2008 in which all books and records were lost. The cashier had absconded with the available cash. Mr. Raghu gives the following information:
|
|
Rs |
|
Payment to Creditors |
5,50,000 |
|
Personal drawings |
30,000 |
|
Cash deposited in bank |
2,86,000 |
|
Cash withdrawn from bank |
48,000 |
Prepare the trading and profit and loss account for the year ended Mar 31, 2008 and a Balance Sheet on that date.
Answer: Gross Profit: Rs 1,44,000; Net Profit: Rs 49,300, Balance Sheet (Total): Rs 4,81,310
(Hint: Prepare, total debtors A/c)
Total Creditors A/C
(Cash book with Bank Column)
48. On 1.4.2008, Mrs. Parul commenced business. She did not maintain proper books of accounts. At the end of the year following information was obtained after going through the records:
|
Rs |
Capital contributed Mrs. Parul |
2,00,000 |
Balance of Cash sales |
1,56,000 |
Collection from Debtors |
2,00,000 |
|
Rs |
Payment to Creditors |
3,00,000 |
Payment of Salary |
70,000 |
Purchase of Furniture |
20,000 |
Prepare Trading and Profit and Loss Account for the year ended 31.3.2009 and a Balance Sheet as on that date.
Answer: Gross Profit Rs 1,04,500; Net Profit: Rs 23,700; Balance Sheet total: Rs 2,51,700
Hints:
3.133.112.171