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Find the Profit Or Loss of Her Business for the Year Ended 31st March, 2012. - Book Keeping and Accountancy

Ledger

Mrs. Ankita keeps her books under Single Entry System and gives the following information.

Particulars 01-04-2011 31-03-2012
Investments - 12,000
Bank Overdraft - 10,000
Bills Payable 5,000 8,000
Creditors 26,500 31,500
Furniture 9,000 19,000
Debtors 35,000 50,000
Stock in Trade 15,000 19,000
Bank Balance 18,000 28,000

Mrs. Ankita withdrew Rs 4,000 for her personal use. She received Rs 15,000 from her father as gift, which she brought into the business.
Additional furniture was purchased on 1st October 2011. Depreciate furniture by 10% p.a.Write off Rs 1,000 as bad and provide 5% R.D.D. on debtors.
Find the profit or loss of her business for the year ended 31st March, 2012.

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Solution

Statement of Affairs
as on April 01,2011
Liabilities
Amount
(Rs)
Assets

Amount

(Rs)

Bills Payable 5,000 Bank Balance 18,000
Creditors 26,500

Furniture

9,000
Capital (Balancing Figure) 45,500 Debtors 35,000
    Stock 15,000
  77,000   77,000
Statement of Affairs
as on March 31,2012
Liabilities
Amount
(Rs)
Assets

Amount

(Rs)

Bills Payable 8,000 Bank Balance 28,000
Creditors 31,500

Furniture

19,000
Bank Overdraft 10,000

Debtors

50,000
Capital (Balancing Figure) 78,500 Stock 19,000
   

Investments

12,000
  128,000   128,000
Statement of Profit or Loss
 
for the year ended March 31,2012
Particulars

Amount (Rs)

Capital at the end of the year 78,500
Add: Drawings made during the year 4,000
Less: Additional capital introduced during the year (15,000)
Adjusted capital at the end of the year 67,500
 Less: Capital in the beginning of the year (45,500)
  22,000
Less: Depreciation on Furniture (1,400)
        Bad-Debts (1,000)
       Reserve for Doubtful Debts (2,450)
                Profit for the year 17,150

Working Notes:

WN1: Calculation of Depreciation on Furniture:
Depreciation  on Furniture for 6 months ( Apr. 01,2011 - Oct.01,2011) = 9,000 x `10/100` x `6/12` = Rs. 450

Depreciation  on Furniture for 6 months ( Oct.01,2011 - Mar.31,2012) = 19,000 x `10/100` x `6/12` = Rs.950

Total Depreciation on charged on Furniture = 450 + 950 = Rs. 1,400.

WN2: Calculation of Reserve for Doubtful Debts:

Reserve for Doubtful Debts = 49,000 x `5/100` = Rs. 2,450.

Concept: Single Entry System Examples and Solutions
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