Maharashtra State BoardHSC Arts 12th Board Exam
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Calculate the Profit for the Year Ended 31st March 2011. - Book Keeping and Accountancy

Ledger

A and B are in Partnership. Their Capitals on 1st April 2010 were Rs 30,000 each. The assets and liabilities as on 31st March 2011 were as follows. Cash in hand Rs 2,400, Cash at Bank Rs 16,000 Bill Receivable Rs 4,000, Debtors Rs 28,600 Stock Rs 26,000. Machinery Rs 14,000, furniture Rs 8,000, Bills Payable Rs 3,000 Sundry creditors Rs 6,000 Outstanding salary Rs 800.

Additional Information:
1) Provide Rs 600 as Bad Debts and 5% R.D.D.
2) Depreciate furniture @ 5% p.a. and Machinery @ 10% p.a.
3) Stock is found undervalued by Rs 2,000.
4) Sundry creditors are found overvalued by Rs 1,000.
5) Prepaid Insurance Rs 2,000.
6) Additional capital introduced by partners Rs 4,000 each.
7) Drawings of ‘A’ Rs 3,000 and ‘B’ Rs 2,000 calculate the profit for the year ended 31st March 2011.

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Solution

Statement of Affairs
as on March 31,2011

Liabilities

Amount (Rs)

Assets

Amount (Rs)

Bills Payable 3,000 Cash in Hand 2,400
Outstanding Salary 800 Cash at Bank 16,000
Sundry Creditors 6,000 Bills Receivable 4,000
Capital (Balancing Figure) 89,200 Debtors 28,600
    Stock 26,000
   

Machinery

14,000
    Furniture 8,000
  99,000   99,000
       
Statement of Profit or Loss
for the year ended March 31,2011
Particulars Amount (Rs.) Amount (Rs.)
Capital at the end of the year   89,200
 Add: Drawings made during the year                                                                 A
                                                             B
         3,000
         2,000
5,000
Less: Additional capital introduced during the year                                    A
                                                            B
         4,000
         4,000
                                                (8,000)
Adjusted capital at the end of the year         86,200
Less: Capital in the beginning of the year                                                      A
                                                             B
       30,000
       30,000

      (60,000)

            26,200
Add: Undervalued Stock   2,000
        Prepaid Insurance   2,000
        Overvalued Creditors   1,000
Less: Bad-Debts   (600)
Reserve for Doubtful Debts (28,000 × 5%)   (1,400)
Depreciation on Machinery   (1,400)
Depreciation on Furniture   (400)
        Profit for the year   27,400
     
Note: In this question too, there seems to be the same problem as we have faced in the last question. The Net Profit as given in the textbook amounts to Rs 31,400, while, as per the solution above, it should be Rs.27,400.
Concept: Single Entry System Examples and Solutions
  Is there an error in this question or solution?
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