Maharashtra State BoardHSC Arts 12th Board Exam
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Closing Statement of Affairs and Statement of Profit Or Loss for the Year Ended 31st March 2011 After Considering the Following Adjustments. - Book Keeping and Accountancy

Ledger

Sun and Moon are partners in a firm sharing profit and losses in the ratio of 3:2. They kept their books under single entry system. On 1st April 2010 the following statement of affairs was extracted from their Books.

Statement of Affairs as on 1st April 2010   
Liabilities

Amount (Rs)

Assets

Amount (Rs)

Capitals:   Plant and Machinery 15,000
Sun 12,500 Stock 10,000
Moon 10,000 Debtors 17,500
Creditors 15,000 Cash in Hand 7,500
Bills Payable 12,500    
  50,000   50,000

On 31st March 2011 theirs assets and liabilities were as follows. Plant and Machinery Rs 44,000 stock Rs 32,000 cash in hand Rs 12,000 creditors Rs 8,000 Debtors Rs 20,000 Bills payable Rs 15,000 Drawings during the year Sun Rs 5,000 and Moon Rs 3,000.

Prepare:
 Closing statement of affairs and statement of profit or Loss for the year ended 31st March 2011 after considering the following adjustments.
1) Plant is found overvalued by 10% and stock is found undervalued by 20%.
2) R.D.D. is to be created at 10% on Debtors.
3) Interest on Capital is to be allowed at 10% p.a. and 10% p.a. on Drawings

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Solution

Statement of Affairs
as on March 31,2011
Liabilities
Amount (Rs)
Assets

Amount (Rs)

Bills Payable 15,000 Cash in Hand 12,000
Creditors 8,000 Stock 32,000
Capital (Balancing Figure) 85,000 Plant and Machinery 44,000
    Debtors 20,000
  108,000   108,000
Statement of Profit or Loss
for the year ended March 31,2011
Particulars

Amount  (Rs.)

 Amount  (Rs.)

Capital at the end of the year   85,000
 Add: Drawings made during the year                                           Sun
                                               Moon
5,000
3,000
8,000
Adjusted capital at the end of the year   93000
Less: Capital in the beginning of the year                                           Sun
                                               Moon
( 12,500)
(10,000)
(22,500)
    70,500
Add: Interest on Drawings     
                                                   Sun
                                               Moon

    250
     150

                 400
Stock (32,000 × 20%)   6,400
Less: Reserve for Doubtful Debts (20,000 × 10%)               (2,000)
Interest on Capital                     Sun
                                                Moon
(1,250)
(1,000)
(2,250)
Plant (44,000 × 10%)   (4,400)
Profit or Loss for the year   68,650
Note: There is a mismatch in the Net Profit as given in the textbook (which is Rs 70,650) and that of as per the above solution (which is Rs 68,650).
Concept: Single Entry System Examples and Solutions
  Is there an error in this question or solution?
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