Question

 Mr. Prabhakar is a retail trader. He had no proper methods of accounting. But the following information is made available to you.  

Particulars	Amount Rs. 1.4.2009	Amount Rs. 31.3.2010
Sundry Debtors Sundry Creditors Bank overdraft Stock Cash in hand Bills receivable Furniture Motor Van Computer 10% Govt. Bonds	45,000 60,000 80,000 65,000 2,000 60,000 10,000 80,000 60,000 −	50,000 70,000 40,000 80,000 8,000 80,000 10,000 80,000 1,20,000 10,000

Adjustments:

(1) On 1st October, 2009 Mr. Prabhakar had withdrawn Rs. 40,000 for his personal use.

(2) 10% Government Bonds were purchased of Rs. 10,000 on 1st October, 2009.

(3) He had also withdrawn Rs. 30,000 for his daughter's marriage.

(4) Depreciate furniture by 10% and write off Rs. 2,000 from motor van.

(5) Rs 2,000 is written off as bad debts and provide 5% R.D.D. on debtors.

(6) Allow interest on capital at 10% p.a.

(7) Charge interest on drawings Rs. 2,000.

Prepare after taking into consideration the adjustments:

Opening statement of affairs of 1.4.2009.

Closing statement of affairs of 31.3.2010.

Statement showing Profit or Loss for the year ended on 31.3.2010.

 

 

Answer 1

In the books of Mr. Prabhakar
Statement of Affairs as on March 31, 2009
Liabilities	Amount (Rs)	Assets	Amount (Rs)
Creditors	60,000	Cash in Hand	2,000
Bank Overdraft	80,000	Debtors	45,000
Capital (Balancing Figure)	1,82,000	Stock	65,000
		Furniture	10,000
		Bills Receivable	60,000
		Motor van	80,000
		Computer	60,000
	3,22,000		3,22,000

 

Statement of Affairs as on March 31, 2010
Liabilities	Amount (Rs)	Assets		Amount (Rs)
Creditors	70,000	Cash in Hand		8,000
Bank Overdraft	40,000	Debtors	50,000
Capital (Balancing Figure)	3,21,100	Less: Bad Debts	2,000
		Less: Provision for Doubtful Debts	2,400	45,600
		Stock		80,000
		Bills Receivable		80,000
		Furniture	10,000
		Less: Depreciation @ 10%	1,000	9,000
		Motor Van	80,000
		Less: Depreciation	2,000	78,000
		Computer		1,20,000
		10% Government Bonds		10,000
		Outstanding Interest on Bond		500
	4,31,100			4,31,100

 

Statement of Profit or Loss for the year ended March 31, 2010
Particulars		Amount (Rs)
Capital at the end of the year 31.03.10		3,21,100
	Add: Drawings made during the year (40,000 + 30,000)	70,000
	Add: Interest on Drawings	2,000
	Less: Additional capital introduced during the year	–
Adjusted capital at the end of the year 31.03.10		3,93,100
	Less: Capital in the beginning of the year 31.03.09	1,82,000
	Less: Interest on Capital	18,200
Profit or Loss for the year		1,92,900

Working Notes:

WN1 Calculation of Provision for Doubtful Debts

\[\text{Provision for Doubtful Debts} = 48, 000 \times \frac{5}{100} = Rs 2, 400\]

WN2 Calculation of Depreciation

\[\text{On Furniture} = 10, 000 \times \frac{10}{100} = Rs 1, 000\]

WN3 Calculation of Accrued Interest on Bonds

\[\text{Accrued Interest on Bonds} = 10,000 \times\frac{10}{100}\times\frac{6}{12}= Rs 500\]

WN4Calculation of Interest on Capital

\[\text{Interest on Capital} = 1, 82, 000 \times\frac{10}{100} = Rs 18, 200\]