Question

Mrs Bhavana keeps his books by Single Entry System. You.re required to prepare final accounts of her business for the year ended March 31, 2017. Her records relating to cash receipts and cash payments for the above period showed the following particulars:

Summary of Cash
Dr.			Cr.
Receipts	Amount Rs	Payments	Amount Rs
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
		March. 31,2017
		Cash in hand	7,000
	1,52,000		1,52,000

The following information is also available:

	April. 01, 2016	March. 31, 2017
	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

All her sales and purchases were on credit. Provide depreciation on plant and building by 10% and machinery by 5%, make a provision for bad debts by 5%.

Answer 1

Books of Mrs. Bhavana 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 Account
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 of Affairs as on April.01, 2016
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 into the statement of affairs on April 01, 2016, instead of Rs 10,00,000.

Trading Account as on March 31, 2017
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 Account
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 on March 31, 2017
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