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Important Formulas, Accounts Formats and Notes for Chapter 1
Illustration problems in Chapter 1 Accounts from Incomplete Records.
Book Back Exercise Solutions
Multiple choice questions
Choose the correct answer: (Answers are highlighted in bold)
| 1. Incomplete records are generally maintained by | |
| (a) A company | (b) Government |
| (c) Small sized sole trader business | (d) Multinational enterprises |
| 2. Statement of affairs is a | |
| (a) Statement of income and expenditure | (b) Statement of assets and liabilities |
| (c) Summary of cash transactions | (d) Summary of credit transactions |
| 3. Opening statement of affairs is usually prepared to find out the | |
| (a) Capital in the beginning of the year | (b) Capital at the end of the year |
| (c) Profit made during the year | (d) Loss occurred during the year |
| 4. The excess of assets over liabilities is | |
| (a) Loss | (b) Cash |
| (c) Capital | (d) Profit |
| 5. Which of the following items relating to bills payable is transferred to total creditors account? | |
| (a) Opening balance of bills payable | (b) Closing balance of bills payable |
| (c) Bills payable accepted during the year | (d) Cash paid for bills payable |
| 6. The amount of credit sales can be computed from | |
| (a) Total debtors account | (b) Total creditors account |
| (c) Bills receivable account | (d) Bills payable account |
| 7. Which one of the following statements is not true in relation to incomplete records? | |
| (a) It is an unscientific method of recording transactions | (b) Records are maintained only for cash and personal accounts |
| (c) It is suitable for all types of organisations | (d) Tax authorities do not accept |
| 8. What is the amount of capital of the proprietor, if his assets are Rs. 85,000 and liabilities are Rs. 21,000? | |
| (a) Rs. 85,000 | (b) Rs.1,06,000 |
| (c) Rs. 21,000 | (d) Rs. 64,000 |
| 9. When capital in the beginning is Rs. 10,000, drawings during the year is Rs. 6,000, profit made during the year is Rs. 2,000 and the additional capital introduced is Rs. 3,000, find out the amount of capital at the end. | |
| (a) Rs. 9,000 | (b) Rs.11,000 |
| (c) Rs. 21,000 | (d) Rs. 3,000 |
| 10. Opening balance of debtors: Rs.30,000, cash received: Rs 1,00,000, credit sales: Rs 90,000; closing balance of debtors is | |
| (a) Rs. 30,000 | (b) Rs.1,30,000 |
| (c) Rs. 40,000 | (d) Rs. 20,000 |
Very short answer questions.
1. What is meant by incomplete records?
Ans: When accounting records are not strictly maintained according to double entry system, these records are called incomplete accounting records.
2. State the accounts generally maintained by small sized sole trader when double entry accounting system is not followed.
Ans: Generally, cash account and the personal accounts of customers and creditors are maintained fully and other accounts are maintained based on necessity.
3.What is a statement of affairs?
A statement of affairs is a statement showing the balances of assets and liabilities on a particular date.
Short answer questions
1. What are the features of incomplete records?
Ans: The features of incomplete records are:
(i) Nature: It is an unscientific and unsystematic way of recording transactions. Accounting principles and accounting standards are not followed properly.
(ii) Type of accounts maintained: In general, only cash and personal accounts are maintained fully. Real accounts and nominal accounts are not maintained properly. Some transactions are completely omitted.
(iii) Lack of uniformity: There is no uniformity in recording the transactions among different organisations. Transactions are recorded according to their needs and conveniences.
(iv) May not represent true and fair view: Due to the incomplete information and inaccurate records of accounts, the profit or loss calculated from these records cannot be relied upon. It may not represent true profitability. Assets and liabilities may not represent a true and fair view of financial position.
(v) Suitability: Only the business concerns which have no legal obligation to maintain books of accounts under double entry system may maintain incomplete records. Hence, it may be maintained by small sized sole traders and partnership firms.
(vi) Mixing up of personal and business transactions: Generally, personal transactions of the owners are mixed up with the business transactions. For example, purchase of goods for own use may be mixed up along with business purchases.
2. What are the limitations of incomplete records?
Ans: The limitations of incomplete records are:
(i) Lack of proper maintenance of records: It is an unscientific and unsystematic way of maintaining records. Real and nominal accounts are not maintained properly.
(ii) Difficulty in preparing trial balance: As the accounting records are incomplete, it is difficult to prepare trial balance to check the arithmetical accuracy of the accounts.
(iii) Difficulty in ascertaining true profitability of the business: Profit is found out based on available information and estimates. Hence, it is difficult to ascertain true profit as the trading and profit and loss account cannot be prepared with accuracy.
(iv) Difficulty in ascertaining financial position: Only the estimated values of assets and liabilities are available from incomplete records. Hence, it is difficult to ascertain the financial position as on a particular date.
(v) Errors and frauds cannot be detected easily: As only partial records are available, it may not be possible to have internal checks in maintaining accounts to detect errors and frauds.
(vi) Unacceptable to government and other authorities: As accounts maintained are incomplete, government, tax and other legal authorities do not accept accounts prepared from incomplete records.
3. State the differences between double entry system and incomplete records.
| Basis of distinction | Double entry system | Incomplete records |
|---|---|---|
| 1. Recording of transactions | Both debit and credit aspects of all the transactions are recorded. | Debit and credit aspects of all the transactions are not recorded completely. For some transactions both aspects are entered, some transactions are partially recorded and some transactions are omitted to be entered. |
| 2. Type of accounts maintained | Personal, real and nominal accounts are maintained fully. | Only personal and cash accounts are maintained fully. Real and nominal accounts are not maintained fully. |
| 3. Preparation of trial balance | Trial balance can be prepared to check the arithmetical accuracy of the entries made in the books of accounts. | It is difficult to prepare the trial balance to check arithmetic accuracy of entries as the accounts are incomplete. |
| 4. Determination of true profit or loss | Trading and profit and loss account can be prepared to find out the true profit or loss. | Trading and profit and loss account cannot be prepared with accuracy as complete information is not available and hence profit or loss found out may not be accurate. |
| 5. Determination of financial position | Balance sheet can be prepared to know the true financial position. | Balance sheet cannot be prepared with accuracy and true financial position cannot be ascertained, as the assets and liabilities are just estimates and incomplete. |
| 6. Suitability | It is suitable for all types of organisations. | It may be suitable for small sized sole traders and partnership firms. |
| 7. Reliability | It is reliable since it is a scientific system of accounting and is based on certain accounting principles. | It is not reliable since it is unscientific. |
| 8. Acceptability | Accounting records are acceptable to all users including tax authorities and financial institutions. | Accounting records may not be acceptable to all users. |
4. State the procedure for calculating profit or loss through statement of affairs.
The difference between the closing capital and the opening capital is taken as profit or loss of the business. Due adjustments are to be made for any withdrawal of capital from the business and for the additional capital introduced in the business.
Take the closing capital as the base. Drawings made during the year should be added with the closing capital. This is because drawings would have reduced the closing capital. Additional capital introduced during the year should be subtracted. This is because the additional capital introduced would have increased the closing capital. This will give the adjusted closing capital.
Adjusted closing capital = Closing capital + Drawings – Additional capital
By comparing adjusted closing capital with the opening capital the profit or loss can be ascertained. If the difference is a positive figure it is profit and if it is negative it is loss.
Closing Capital + Drawings – Additional Capital – Opening Capital = Profit/ Loss
5. Differentiate between statement of affairs and balance sheet.
| Basis of distinction | Statement of affairs | Balance sheet |
|---|---|---|
| 1. Objective | Statement of affairs is generally prepared to find out the capital of the business. | Balance sheet is prepared to ascertain the financial position of the business. |
| 2. Accounting system | Statement of affairs is prepared when double entry system is not strictly followed. | Balance sheet is prepared when accounts are maintained under double entry system. |
| 3. Basis of preparation | It is not fully based on ledger balances. Whereever possible ledger balances are taken. Some items are taken from some source documents and some items are mere estimates. | It is prepared exclusively on the basis of ledger balances. |
| 4. Reliability | It is not reliable as it is based on incomplete records. | It is reliable as it is prepared under double entry system. |
| 5. Missing items | It is difficult to trace the items omitted as complete records are not maintained. | Since both the aspects of all transactions are duly recorded, items omitted can be traced easily. |
6. How is the amount of credit sale ascertained from incomplete records?
The Total Debtors Account has to be prepared to ascertain the amount of credit sale from incomplete records. The format for preparing the total debtors account is:
| Particulars | Rs. | Particulars | Rs. |
|---|---|---|---|
| To Balance b/d | xxx | By Cash A/c (received) | xxx |
| (opening balance) | By Bank A/c (cheques received) | xxx |
|
| To Sales A/c (credit sales) | xxx | By Discount allowed A/c | xxx |
| To Bank A/c (cheque dishonoured) | xxx | By Sales returns A/c | xxx |
| To Bills receivable A/c | xxx | By Bad debts A/c | xxx |
| (bills dishonoured) | By Bills receivable A/c | xxx |
|
| (bills received) | |||
| By Balance c/d | xxx |
||
| (closing balance) | |||
| Total | xxx | Total | xxx |
Exercises:
1. From the following particulars ascertain profit or loss:
| Particulars | Rs. |
|---|---|
| Capital at the beginning of the year (1st April, 2018) | 5,00,000 |
| Capital at the end of the year (31st March, 2019) | 8,50,000 |
| Additional capital introduced during the year | 1,20,000 |
| Drawings during the year | 70,000 |
Ans: Profit or loss = Closing capital + Drawings –Additional Capital – Opening capital
=Rs. 850000 + Rs. 70000 – Rs. 120000-Rs. 500000
=Rs. 3,00,000
Statement of Profit or loss for the year ended 31, March, 2019
| Particulars | Rs. |
|---|---|
| Closing as on 31.03.2019 | 8,50,000 |
| Add: Drawing during the year | 70,000 |
| 9,20,000 | |
| Less: Additional capital introduced during the year | 1,20,000 |
| Adjusted closing capital | 8,00,000 |
| Less: Opening_Capital (as on 01.04.2018) | 5,00,000 |
| Profit made during the year | 3,00,000 |
2. From the following particulars ascertain profit or loss.
| Particulars | Rs. |
|---|---|
| Capital as on 1st January 2018 | 2,20,000 |
| Capital as on 31st December 2018 | 1,80,000 |
| Additional capital introduced during the year | 40,000 |
| Drawings made during the year | 50,000 |
Ans:
Statement of Profit or loss for the year ended 31, December, 2018
| Particulars | Rs. |
|---|---|
| Capital as on 31.12.2018 | 1,80,000 |
| Add: Drawing during the year | 50,000 |
| 2,30,000 | |
| Less: Additional capital | 40,000 |
| Adjusted closing capital | 1,90,000 |
| Less: Opening Capital (as on 01.01.2018) | 2,20,000 |
| Loss incurred during the year | -30,000 |
3. From the following details, calculate the missing figure.
| Particulars | Rs. |
|---|---|
| Closing capital as on 31.3.2018 | 80,000 |
| Additional capital introduced during the year | 30,000 |
| Drawings during the year | 15,000 |
| Opening capital on 01.4.2017 | ? |
| Loss for the year ending 31.3.2018 | 25,000 |
Ans:
Statement of Profit or loss for the year ended 31, March, 2018
| Particulars | Rs. |
|---|---|
| Closing Capital as on 31.03.2018 | 80,000 |
| Add: Drawing during the year | 15,000 |
| 95,000 | 15,000 |
| Less: Additional capital | 30,000 |
| Adjusted closing capital | 65,000 |
| Less: Opening Capital (as on 01.01.2018) | 90,000 |
| Loss incurred during the year | 25,000 |
4. From the following details, calculate the capital as on 31st December 2018.
| Particulars | Rs. |
|---|---|
| Capital as on 1st January, 2018 | 1,00,000 |
| Goods withdrawn for personal use by the owner | 30,000 |
| Additional capital introduced during the year | 15,000 |
| Profit for the year | 60,000 |
Ans:
Statement of Profit or loss for the year ended 31, December, 2018
| Particulars | Rs. |
|---|---|
| Closing Capital as on 31.12.2018 | 1,45,000 |
| Add Drawing (goods are withdrawn for personal use) | 30,000 |
| 1,75,000 | |
| Less Additional capital | 15,000 |
| Adjusted closing capital | 1,60,000 |
| Less opening Capital (as on 01.01.2018) | 1,00,000 |
| Profit for the year | 60,000 |
Profit /loss = Opening capital+ Additional capital – Drawings – Closing capital
Rs. 60000 = Rs. 100000 + Rs. 15000 – Rs. 30000 – Closing capital
Closing capital = Rs. 100000 + Rs. 15000 -Rs. 30000 + Rs. 60000
= Rs. 1,45,000
5. From the following details, calculate the missing figure:
| Particulars | Rs. |
|---|---|
| Capital as on 1st April, 2018 | 40,000 |
| Capital as on 31st March, 2019 | 50,000 |
| Additional capital introduced during the year | 7,000 |
| Profit for the year | 8,000 |
| Drawings during the year | ? |
Ans:
Statement of Profit /loss for the year ended 31st March 2019
| Particulars | Rs. |
|---|---|
| Closing Capital as on 31.03.2019 | 50,000 |
| Add: Drawing (bal.fig) | 5,000 |
| 55,000 | |
| Less: Additional capital introduced | 7,000 |
| Adjusted closing capital | 48,000 |
| Less: Opening Capital (as on 01.04.2018) | 1,00,000 |
| Profit made during the year | 8,000 |
6. Following are the balances in the books of Thomas as on 31st March 2019.
| Particulars | Rs. | Particulars | Rs. |
|---|---|---|---|
| Sundry creditors | 6,00,000 | Bills payable | 1,20,000 |
| Furniture | 80,000 | Cash in hand | 20,000 |
| Land and building | 3,00,000 | Bills receivable | 60,000 |
| Sundry Debtors | 3,20,000 | Stock | 2,20,000 |
Prepare a statement of affairs as on 31st March 2019 and calculate capital as at that date.
Ans:
Statement of affairs as on 31st March, 2019
| Liabilities | Rs. | Assets | Rs. |
|---|---|---|---|
| Sundry creditors | 600000 | Furniture | 80000 |
| Bills payables | 120000 | Cash in hand | 20000 |
| Capital | 280000 | Land & building | 300000 |
| Bills receivable | 60000 | ||
| Sundry debtors | 320000 | ||
| Stock | 220000 | ||
| Total | 10,00,000 | Total | 10,00,000 |
7. On 1st April 2018 Subha started her business with a capital of Rs. 1,20,000. She did not maintain proper book of accounts. Following particulars are available from her books as on 31.3.2019.
| Particulars | Rs. | Particulars | Rs. |
|---|---|---|---|
| Bank overdraft | 50,000 | Stock-in-trade | 1,60,000 |
| Debtors | 1,80,000 | Creditors | 90,000 |
| Bills receivable | 70,000 | Bills payable | 2,40,000 |
| Computer | 30,000 | Cash in hand | 60,000 |
| Machinery | 3,00,000 |
During the year she withdrew Rs. 30,000 for her personal use. She introduced further capital of Rs. 40,000 during the year. Calculate her profit or loss.
Ans:
Statement of affairs as on 31st March, 2019
| Liabilities | Rs. | Assets | Rs. |
|---|---|---|---|
| Bank overdraft | 50,000 | Cash in hand | 60,000 |
| Creditors | 90,000 | Stock-in-trade | 1,60,000 |
| Bills payable | 2,40,000 | Bills receivable | 70,000 |
| Capital | 4,20,000 | Debtors | 1,80,000 |
| Computer | 30,000 | ||
| Machinery | 3,00,000 | ||
| Total | 8,00,000 | Total | 8,00,000 |
Statement of profit/loss for the year ended 31st March 2019
| Particulars | Rs. |
|---|---|
| Closing capital | 4,20,000 |
| Add: Drawings | 30,000 |
| 4.50,000 | |
| Less: Additional capital | 40,000 |
| Adjusted capital | 4,10,000 |
| Less: Opening capital | 1,20,000 |
| Profit | 2,90,000 |
8. Raju does not keep proper books of accounts. Following details are taken from his records.
| Particulars | 1.1.2018 (Rs.) | 31.12.2018 (Rs.) |
|---|---|---|
| Cash at bank | 80,000 | 90,000 |
| Stock of goods | 1,80,000 | 1,40,000 |
| Debtors | 90,000 | 2,00,000 |
| Sundry creditors | 1,30,000 | 1,95,000 |
| Bank Loan | 60,000 | 60,000 |
| Bills payable | 80,000 | 45,000 |
| Plant and machinery | 1,70,000 | 1,70,000 |
During the year he introduced further capital of Rs. 50,000 and withdrew Rs. 2,500 per month from the business for his personal use. Prepare statement of profit or loss with the above information.
Ans:
Statement of affairs of Raju as on 1st January 2018 and 31st December 2018
| Liabilities | 1.1.2018 (Rs.) | 31.12.2018 (Rs.) | Assets | 1.1.2018 (Rs.) | 31.12.2018 (Rs.) |
|---|---|---|---|---|---|
| Sundry creditors | 1,30,000 | 1,95,000 | Cash at bank | 80,000 | 90,000 |
| Bank Loan | 60,000 | 60,000 | Stock of goods | 1,80,000 | 1,40,000 |
| Bills payable | 80,000 | 45,000 | Debtors | 90,000 | 2,00,000 |
| Capital | 2,50,000 | 3,00,000 | Plant and machinery | 1,70,000 | 1,70,000 |
| Total | 5,20,000 | 6,00,000 | Total | 5,20,000 | 6,00,000 |
Statement of profit/loss for the year ended 31st December 2018
| Closing capital | 3,00,000 |
|---|---|
| Add: Drawings | 30,000 |
| 3,30,000 | |
| Less: Additional capital | 50,000 |
| Adjusted capital | 2,80,000 |
| Less: Opening capital | 2,50,000 |
| Profit | 30,000 |
9. Ananth does not keep his books under double entry system. Find the profit or loss made by him for the year ending 31st March, 2019.
| Particulars | 31.03.2018 (Rs.) | 31.03.2019 (Rs.) |
|---|---|---|
| Cash at Bank | 5,000 (Dr.) | 60,000 (Cr.) |
| Cash in hand | 3,000 | 4,500 |
| Stock of goods | 35,000 | 45,000 |
| Sundry Debtors | 1,00,000 | 90,000 |
| Plant and Machinery | 80,000 | 80,000 |
| Land and Buildings | 1,40,000 | 1,40,000 |
| Sundry Creditors | 1,70,000 | 1,30,000 |
Ananth had withdrawn Rs. 60,000 for his personal use. He had introduced Rs. 17,000 as capital for expansion of his business. Create a provision of 5% on debtors. Plant and machinery is to be depreciated at 10%.
Ans:
Statement of affairs of Ananth as on 31st March 2018 and 31st March 2019
| Liabilities | 31.03.2018 (Rs.) | 31.03.2019 (Rs.) | Assets | 31.03.2018 (Rs.) | 31.03.2019 (Rs.) |
|---|---|---|---|---|---|
| Cash at bank | 60,000 | Cash at bank | 5,000 | ||
| Sundry creditors | 1,70,000 | 1,30,000 | Cash in hand | 3,000 | 4,500 |
| Capital | 1,93,000 | 1,57,000 | Stock of goods | 35,000 | 45,000 |
| Sundry Debtors | 1,00,000 | 85,500 | |||
| Plant and Machinery | 80,000 | 72,000 | |||
| Land and Buildings | 1,40,000 | 1,40,000 | |||
| Total | 363000 | 347000 | Total | 363000 | 347000 |
Statement of profit or loss for the year ended 31st March 2019
| Closing capital | 1,57,000 |
|---|---|
| Add: Drawings | 60,000 |
| 2,17,000 | |
| Less: Additional capital | 17,000 |
| Adjusted capital | 2,00,000 |
| Less: Opening capital | 1,93,000 |
| Profit | 7,000 |
10. Find out credit sales from the following information:
| Particulars | Rs. |
|---|---|
| Debtors on 1st April, 2018 | 1,00,000 |
| Cash received from debtors | 2,30,000 |
| Discount allowed | 5,000 |
| Returns inward | 25,000 |
| Debtors on 31st March 2019 | 1,20,000 |
Ans:
Total Debtors A/c
| Particulars | Rs. | Particulars | Rs. |
|---|---|---|---|
| To balance b/d | 1,00,000 | By cash received | 2,30,000 |
| To credit sales | 2,80,000 | By discount allowed | 5,000 |
| ( balancing figure) | By returns inward | 25,000 | |
| By balance c/d | 1,20,000 | ||
| Total | 3,80,000 | Total | 3,80,000 |
11. From the following details find out total sales made during the year.
| Particulars | Rs. |
|---|---|
| Debtors on 1st January 2018 | 1,30,000 |
| Cash received from debtors during the year | 4,20,000 |
| Sales returns | 35,000 |
| Bad debts | 15,000 |
| Debtors on 31st December 2018 | 2,00,000 |
| Cash Sales | 4,60,000 |
Ans:
Total Debtors A/c
| Particulars | Rs. | Particulars | Rs. |
|---|---|---|---|
| To balance b/d | 1,30,000 | By cash received | 4,20,000 |
| To credit sales | 5,40,000 | By sales returns | 35,000 |
| ( balancing figure) | By bad debts | 15,000 | |
| By balance c/d | 2,00,000 | ||
| Total | 6,70,000 | Total | 6,70,000 |
Total sales = Cash sales + Credit sales
= Rs, 4,60,000 + Rs. 5,40,000 = Rs. 10,00,000
12. From the following particulars, prepare bills receivable amount and compute the bills received from the debtors.
| Particulars | Rs. |
|---|---|
| Bills receivable at the beginning of the year | 1,40,000 |
| Bills receivable at the end of the year | 2,00,000 |
| Cash received for bills receivable | 3,90,000 |
| Bills receivable dishonoured | 30,000 |
Ans:
Bills Receivable A/c
| Particulars | Rs. | Particulars | Rs. |
|---|---|---|---|
| To balance b/d | 1,40,000 | By cash receivable | 3,90,000 |
| To bills received a/c | 4,80,000 | By debtors (dishonoured) | 30,000 |
| ( balancing figure) | By balance c/d | 2,00,000 | |
| Total | 6,20,000 | Total | 6,20,000 |
13. From the following particulars, calculate total sales.
| Particulars | Rs. | Particulars | Rs. |
|---|---|---|---|
| Debtors on 1st April 2018 | 2,50,000 | Bills receivable dishonoured | 15,000 |
| Bills receivable on 1st April 2018 | 60,000 | Returns inward | 50,000 |
| Cash received from debtors | 7,25,000 | Bills receivable on 31st March, 2019 | 90,000 |
| Cash received for bills receivable | 1,60,000 | Sundry debtors on 31st March, 2019 | 2,40,000 |
| Bad debts | 30,000 | Cash sales | 3,15,000 |
Ans:
Bills Receivable A/c
| Particulars | Rs. | Particulars | Rs. |
|---|---|---|---|
| To balance b/d | 60,000 | By cash receivable | 1,60,000 |
| To bills received a/c | 2,05,000 | By debtors (dishonoured) | 15,000 |
| ( balancing figure) | By balance c/d | 90,000 | |
| Total | 2,65,000 | Total | 2,65,000 |
Total Debtors A/c
| Particulars | Rs. | Particulars | Rs. |
|---|---|---|---|
| To balance b/d | 2,50,000 | By cash received | 7,25,000 |
| To bills dishonoured a/c | 15,000 | By bad debts | 30,000 |
| To credit sales | 985000 | By returns inward | 50000 |
| By balance c/d | 2,40,000 | ||
| By bills receivable | 2,05,000 | ||
| Total | 12,50,000 | Total | 12,50,000 |
Total sales = Cash sales + Credit sales
= Rs. 3,15,000 + 9,85,000
= 13,00,000
14. From the following details, calculate credit purchases.
| Particulars | Rs. |
|---|---|
| Opening creditors | 1,70,000 |
| Purchase returns | 20,000 |
| Cash paid to creditors | 4,50,000 |
| Closing creditors | 1,90,000 |
Ans:
Total Creditor a/c
| Particulars | Rs. | Particulars | Rs. |
|---|---|---|---|
| To purchase returns | 20,000 | By balance b/d | 1,70,000 |
| To cash paid | 4,50,000 | By credit purchases | 4,90,000 |
| To balance c/d | 190000 | ||
| Total | 6,60,000 | Total | 6,60,000 |
15. From the following particulars calculate total purchases.
| Particulars | Rs. | Particulars | Rs. |
|---|---|---|---|
| Sundry creditors on 1st January, 2018 | 30,000 | Purchases returns | 15,000 |
| Bills payable on 1st January, 2018 | 25,000 | Cash purchases | 2,25,000 |
| Paid cash to creditors | 1,20,000 | Creditors on 31st December, 2018 | 25,000 |
| Paid for bills payable | 30,000 | Bills payable on 31st December, 2018 | 20,000 |
Ans:
Bills payable a/c
| Particulars | Rs. | Particulars | Rs. |
|---|---|---|---|
| To cash paid | 30,000 | By balance b/d | 25,000 |
| To balance c/d | 20,000 | By bills payable | 25,000 |
| ( balancing figure) | |||
| Total | 50,000 | Total | 50,000 |
Total Creditors a/c
| Particulars | Rs. | Particulars | Rs. |
|---|---|---|---|
| To purchase returns | 15,000 | By balance b/d | 30,000 |
| To cash paid | 1,20,000 | By credit purchases | 1,55,000 |
| To balance c/d | 25000 | ||
| To bills payable a/c | 25000 | ||
| Total | 1,85,000 | Total | 1,85,000 |
Total sales = Cash sales + Credit sales
= Rs. 2,25,000 + 1,55,000
= `Rs. 3,80,000
16. From the following details you are required to calculate credit sales and credit purchases by preparing total debtors account, total creditors account, bills receivable account and bills payable account.
| Particulars | Rs. | Particulars | Rs. |
|---|---|---|---|
| Balances as on 1st April 2018 | Balances as on 31st March 2019 | ||
| Sundry debtors | 2,40,000 | Sundry debtors | 2,20,000 |
| Bills receivable | 30,000 | Sundry creditors | 1,50,000 |
| Sundry creditors | 1,20,000 | Bills receivable | 8,000 |
| Bills payable | 10,000 | Bills payable | 20,000 |
| Other information: | |||
| Cash received from debtors | 6,00,000 | Payments against bill payable | 30,000 |
| Discount allowed to customers | 25,000 | Cash received for bills receivable | 60,000 |
| Cash paid to creditors | 3,20,000 | Bills receivable dishonoured | 4,000 |
| Discount allowed by suppliers | 10,000 | Bad debts | 16,000 |
Ans:
Bills Receivable a/c
| Particulars | Particulars | ||
|---|---|---|---|
| To balance b/d | 30,000 | By cash | 60000 |
| To Sundry debtors a/c | 42,000 | By debtors | 4000 |
| ( balancing figure) | By balance c/d | 8000 | |
| Total | 72,000 | Total | 72000 |
Total Debtors a/c
| Particulars | Particulars | ||
|---|---|---|---|
| To balance b/d | 2,40,000 | By cash received | 6,00,000 |
| To bills dishonoured a/c | 4,000 | By bad debts | 16,000 |
| To credit sales | 6,59,000 | By discount allowed | 25000 |
| By bills receivable | 42,000 | ||
| By balance c/d | 2,00,000 | ||
| Total | 9,03,000 | Total | 9,03,000 |
Bills Payable a/c
| Particulars | Rs. | Particulars | Rs. |
|---|---|---|---|
| To cash paid | 30,000 | By balance b/d | 10,000 |
| To balance c/d | 20,000 | By creditors a/c | 40,000 |
| Total | 50,000 | 50,000 |
Total Creditors a/c
| Particulars | Rs. | Particulars | Rs. |
|---|---|---|---|
| To discount | 10,000 | By balance b/d | 1,20,000 |
| To cash paid | 3,20,000 | By credit purchases | 4,00,000 |
| To bills payable a/c | 40000 | ||
| To balance c/d | 150000 | ||
| Total | 5,20,000 | Total | 5,20,000 |
17. From the following details of Rakesh, prepare Trading and Profit and Loss account for the year ended 31st March, 2019 and a Balance Sheet as on that date.
| Particulars | 31.3.2018 (Rs.) | 31.3.2019 (Rs.) | |
|---|---|---|---|
| Stock of goods | 2,20,000 | 1,60,000 | |
| Debtors | 5,30,000 | 6,40,000 | |
| Cash at bank | 60,000 | 10,000 | |
| Machinery | 80,000 | 80,000 | |
| Sundry creditors | 3,70,000 | 4,20,000 | |
| Other details: | |||
| Rent paid | 1,20,000 | Cash received from debtors | 12,50,000 |
| Discount received | 35,000 | Drawings | 1,00,000 |
| Discount allowed | 25,000 | Cash sales | 20,000 |
| Cash paid to creditors | 11,00,000 | Capital as on 1.4.2018 | 5,20,000 |
Ans:
Total Debtor a/c
| Particulars | Rs. | Particulars | Rs. |
|---|---|---|---|
| To balance b/d | 5,30,000 | By cash | 12,50,000 |
| To credit sales | 13,85,000 | By discount allowed | 25,000 |
| By balance c/d | 6,40,000 | ||
| Total | 19,15,000 | Total | 19,15,000 |
Total sales = Cash sales + Credit sales
=Rs. 20,000+ 13,85,000 = Rs.14,05,000
Total Creditors a/c
| Particulars | Rs. | Particulars | Rs. |
|---|---|---|---|
| To cash | 11,00,000 | By balance b/d | 3,70,000 |
| To discount received | 35,000 | By credit purchases | 11,85,000 |
| To balance c/d | 4,20,000 | (balancing figure) | |
| Total | 15,55,000 | Total | 15,55,000 |
In the book of Rakesh
Trading and Profit and loss account for the year ending 31st March, 2019
| Particulars | Rs. | Rs. | Particulars | Rs. | Rs. |
|---|---|---|---|---|---|
| To Opening stock | 2,20,000 | By Sales | |||
| To Purchases | 1185000 | Cash | 20,000 | ||
| To Gross profit c/d | 1,60,000 | Credit | 13,85,000 | 15,85,000 | |
| By Closing stock | 1,60,000 | ||||
| Total | 15,65,000 | Total | 15,65,000 | ||
| To rent | 1,20,000 | By Gross Profit b/d | 1,60,000 | ||
| To discount allowed | 25,000 | By discount received | 35,000 | ||
| To Net profit transferred to capital a/c | 50,000 | ||||
| Total | 1,95,000 | Total | 1,95,000 |
Balance sheet as on 31st March, 2019
| Liabilities | Rs. | Assets | Rs. | |
|---|---|---|---|---|
| Creditors | 4,20,000 | Cash at bank | 1,60,000 | |
| Closing Stock | 1,60,000 | |||
| Opening capital | 5,20,000 | Debtors | 6,40,000 | |
| Add: Net profit | 50,000 | Machinery | 80,000 | |
| 5,70,000 | ||||
| Less: Drawings | 1,00,000 | 470000 | ||
| Total | 890000 | Total | 890000 |
18. Mary does not keep her books under double entry system. From the following details prepare trading and profit and loss account for the year ending 31st March, 2019 and a balance sheet as on that date.
| Cash a/c | |||
|---|---|---|---|
| Particulars | Rs. | Particulars | Rs. |
| To Balance b/d | 1,20,000 | By Purchases | 1,50,000 |
| To Sales | 3,60,000 | By Creditors | 2,50,000 |
| To Debtors | 3,40,000 | By Wages | 70,000 |
| By Sundry expenses | 1,27,000 | ||
| By Balance c/d | 2,23,000 | ||
| Total | 8,20,000 | Total | 8,20,000 |
| Other information: | 1.4.2018 | 31.3.2019 | |
| Stock of goods | 1,10,000 | 1,80,000 | |
| Sundry Debtors | 1,30,000 | ? | |
| Sundry Creditors | 1,60,000 | 90,000 | |
| Furniture and fittings | 80,000 | 80,000 | |
| Additional information: ` | |||
| Credit purchases | 1,80,000 | ||
| Credit sales | 2,90,000 | ||
| Opening capital | 2,80,000 | ||
| Depreciate furniture and fittings by 10% p.a. | |||
Ans:
Sundry Debtors a/c
| Particulars | Rs. | Particulars | Rs. |
|---|---|---|---|
| To balance b/d | 1,30,000 | By cash received | 3,40,000 |
| To credit sales | 2,90,000 | By balance c/d | 80,000 |
| ( balancing figure) | |||
| Total | 4,20,000 | Total | 4,20,000 |
Total sales = Cash sales + Credit sales
= Rs. 3,60,000+ Rs. 2,90,000 = Rs. 6,50,000
In the books of Mary
Trading and Profit & Loss a/c for the year ending 31st March, 2019
| Particulars | Rs. | Rs. | Particulars | Rs. | Rs. |
|---|---|---|---|---|---|
| To Opening stock | 1,10,000 | By Sales | |||
| To Purchases | Cash | 3,60,000 | |||
| Cash | 150000 | Credit | 2,90,000 | 6,50,000 | |
| Credit | 1,80,000 | 3,30,000 | By Closing stock | 1,80,000 | |
| To wages a/c | 70,000 | ||||
| To Gross profit c/d | 3,20,000 | ||||
| Total | 8,30,000 | Total | 8,30,000 | ||
| To sundry expenses | 1,27,000 | By Gross Profit b/d | 3,20,000 | ||
| To depreciation | 8,000 | ||||
| To Net profit transferred to capital a/c | 1,85,000 | By discount received | |||
| Total | 320000 | Total | 320000 |
Balance sheet as on 31st March 2019
| Liabilities | Rs. | Assets | Rs. | Rs. | |
|---|---|---|---|---|---|
| Creditors | 90,000 | Cash at bank | 2,23,000 | ||
| Closing Stock | 1,80,000 | ||||
| Opening capital | 2,80,000 | Debtors | 80,000 | ||
| Add: Net profit | 1,85,000 | 465000 | Furniture & Fittings | 80,000 | |
| Less: Depreciation | 8,000 | 72,000 | |||
| Total | 5,55,000 | Total | 5,55,000 |
19. Arun carries on hardware business and does not keep his books on double entry basis.
The following particulars have been extracted from his books:.
| Particulars | 31.12.2017 (Rs.) | 31.12.2018 (Rs.) |
|---|---|---|
| Land and building | 2,40,000 | 2,40,000 |
| Stock-in-trade | 1,20,000 | 1,70,000 |
| Debtors | 40,000 | 51,500 |
| Creditors | 50,000 | 45,000 |
| Cash at bank | 30,000 | 53,000 |
| Other information for the year ending 31.12.2018 showed the following: | ||
| Rs. | ||
| Wages | 65,000 | |
| Carriage outwards | 7,500 | |
| Sundry expense | 28,000 | |
| Cash paid to creditors | 6,00,000 | |
| Drawings | 10,000 | |
Total sales during the year were Rs. 7,70,000. Purchases returns during the year were Rs. 30,000 and sales returns were Rs. 25,000. Depreciate land and buildings by 5%. Provide Rs. 1,500 for doubtful debts. Prepare trading and profit and loss account for the year ending 31st December, 2018 and a balance sheet as on that date.
Ans:
Statement of affairs as on 31st December 2017
| Liabilities | Rs. | Assets | Rs. |
|---|---|---|---|
| Creditors | 50,000 | Cash at bank | 30,000 |
| Capital | 3,80,000 | Stock | 1,20,000 |
| Debtors | 4,00,000 | ||
| Land and Building | 2,40,000 | ||
| Total | 4,30,000 | Total | 4,30,000 |
Sundry Creditors a/c
| Particulars | Rs. | Particulars | Rs. |
|---|---|---|---|
| To purchase returns | 30,000 | By balance b/d | 50,000 |
| To cash paid | 6,00,000 | By credit purchases | 6,25,000 |
| To balance c/d | 45,000 | ( balancing figure) | |
| Total | 6,75,000 | Total | 6,75,000 |
In the books of Arun
Trading and Profit and Loss a/c for the year ending 31st December, 2018
| Particulars | Rs. | Rs. | Particulars | Rs. | Rs. |
|---|---|---|---|---|---|
| To Opening stock | 1,20,000 | By Sales | 7,70,000 | ||
| To credit purchases | 6,25,000 | Less: Returns | 25,000 | 7,45,000 | |
| Less: Returns | 30,000 | 5,95,000 | By Closing stock | 1,70,000 | |
| To wages a/c | 65,000 | ||||
| To Gross profit c/d | 1,35,000 | ||||
| Total | 9,15,000 | Total | 9,15,000 | ||
| To carriage returns | 7,500 | By Gross Profit b/d | 1,35,000 | ||
| To depreciation | 12,000 | ||||
| To sundry expenses | 28,000 | ||||
| To provision for bad and doubtful debts | 1,500 | ||||
| To Net profit transferred to capital a/c | 86,000 | ||||
| Total | 1,35,000 | Total | 1,35,000 |
Balance sheet as on 31st December 2019
| Liabilities | Rs. | Rs. | Assets | Rs. | Rs. |
|---|---|---|---|---|---|
| Creditors | 45,000 | Cash at bank | 53,000 | ||
| Capital | 3,80,000 | Closing Stock | 1,70,000 | ||
| Add: Net profit | 86,000 | Debtors | 51,000 | ||
| 4,66,000 | Less: Provision for bad debts | 1,500 | 50,000 | ||
| Less: Drawings | 10,000 | 4,56,000 | Land and Building | 2,40,000 | |
| Less: Depreciation | 12,000 | 2,28,000 | |||
| Total | 5,01,000 | Total | 5,01,000 |
20. Selvam does not keep his books under double entry system. From the following information prepare trading and Profit and loss A/c and Balance Sheet as on 31-12-2018.
Ans:
| Particulars | 1-1-2018 (Rs.) | 31-12-2018 (Rs.) | |
|---|---|---|---|
| Machinery | 60,000 | 60,000 | |
| Cash at bank | 25,000 | 33,000 | |
| Sundry debtors | 70,000 | 1,00,000 | |
| Stock | 45,000 | 22,000 | |
| Bills receivable | 20,000 | 38,000 | |
| Bank loan | 45,000 | 45,000 | |
| Sundry creditors | 25,000 | 21,000 | |
| Additional Information: | Rs. | Rs. | |
| Cash sales | 20,000 | Credit sales | 1,80,000 |
| Cash purchases | 8,000 | Credit purchases | 52,000 |
| Wages | 6,000 | Salaries | 23,500 |
| Advertisement | 7,000 | Interest on bank loan | 4,500 |
| Drawings | 60,000 | Additional capital | 21,000 |
| Adjustments: | |||
| Write off depreciation of 10% on machinery. | |||
| Create a reserve of 1% on debtors for doubtful debts. | |||
Statement of affairs as on 31st December 2017
| Liabilities | Rs. | Assets | Rs. |
|---|---|---|---|
| Creditors | 25,000 | Cash | 25,000 |
| Bank loan | 45,000 | Stock | 45,000 |
| Capital | 1,50,000 | Debtors | 70,000 |
| ( balancing figure) | Machinery | 60,000 | |
| Bills Receivable | 20,000 | ||
| Total | 2,20,000 | Total | 2,20,000 |
In the books of Selvam
Trading & Profit and loss account for the year ending 31st March 2018
| Particulars | Rs. | Rs. | Particulars | Rs. | Rs. |
|---|---|---|---|---|---|
| To Opening stock | 45,000 | By Sales | |||
| To Purchases | Credit | 1,80,000 | |||
| Credit | 52,000 | Cash | 20,000 | 2,00,000 | |
| Cash | 8000 | 60000 | By Closing stock | 22000 | |
| To wages a/c | 6,000 | ||||
| To Gross profit c/d | 1,11,000 | ||||
| Total | 2,22,000 | Total | 2,22,000 | ||
| To salaries | 23,500 | By Gross Profit b/d | 1,11,000 | ||
| To depreciation | 6,000 | ||||
| To Interest on bank loan | 4,500 | ||||
| To provision for bad and doubtful debts | 1,000 | ||||
| To Advertisement | 7,000 | ||||
| To Net profit transferred to capital a/c | 69,000 | ||||
| Total | 1,11,000 | Total | 1,11,000 |
Balance sheet as on 31st December 2018
| Liabilities | Rs. | Rs. | Assets | Rs. | Rs. |
|---|---|---|---|---|---|
| Creditors | 45,000 | Cash at bank | 33,000 | ||
| Capital | 1,50,000 | Stock | 22,000 | ||
| Add: Net profit | 69,000 | Debtors | 1,00,000 | ||
| 2,19,000 | Less: Provision for bad debts | 1,000 | 99,000 | ||
| Less: Drawings | 60,000 | Machinery | 60,000 | ||
| 1,59,000 | Less: Depreciation | 6,000 | 54,000 | ||
| Add: Additional capital | 21,000 | 180000 | Bills Receivable | 38,000 | |
| Sundry Creditors | 21000 | ||||
| Bank loan | 45,000 | ||||
| Total | 2,46,000 | Total | 2,46,000 |
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