Question

Miss Kalpana started her business with a capital of 1,30,000 on 1st April, 2015. Her financial position on 31st March 2016 was as follows:

	Amount ( Rs)
Cash	9,120
Stock	10,250
Bills payable	12,880
Creditors	17,180
Debtors	31,000
Prepaid insurance	550
Bills receivable	29,120
Premises	85,800
Vehicles	40,200

Additional information :
1. Miss Kalpana brought additional capital of 20,000 on 30th September, 2015

2. Interest on capital is to be allowed at 5% p.a.

3. She withdrew 10, 000 for personal use.

4. Reserve for doubtful debts is to be provided at 2½ % after writing off bad debts of 1,000.

5. Depreciate vehicles at 10% p.a. and premises at 5 % p.a.

6. Creditors were overvalued by 2,180.

Prepare :
(1) Closing Statement of Affairs as on 31.03.2016.
(2) Statement of Profit or Loss for the year ended 31.03.2016.

Answer 1

In the books of Miss kalpana

Closing Statement of Affairs as on 31st March, 2016

Liabilities	Amount	Assets	Amount
Bills payable	12,880	Cash	9,120
Creditors	17,180	Stock	10,250
Capital (Balancing Figure)	1,75,980	Debtors	31,000
		Prepaid Insurance	550
		Bills Receivable	29,120
		Premises	85,800
		Vehicles	40,200
	2,06,040		206040

 

Statement of Profit or Loss
for the year ended 31st March,2016

Particulars	Amount (Rs.)	Amount (Rs.)
Capital at the end of the year.		1,75,980
Add: Drawings during the year		10,000
		1,85,980
Less: Additional Capital Introduced		(-20000)
Adjusted Closing capital		1,65,980
Less: Capital at the beginning of the year.		(-1,30,000)
Profit Before Adjustments		35,980
Less: Depreciation on vehicle	4020	8310
depreciation on-premises	4290
		27670
Less: Interest on capital	6500	8250
Less: Bad debts	1000
Less: RDD	750
		19420
Add: Creditors overruled Net Profit for the year		2180
NET PROFIT		21,600

 

Liabilities		Amount	Assets		Amount
Bills Payable		12880	Cash		9120
Creditors	17180	15060	Stock		10250
El overvalued	2180		Debtors	31000	29250
Capital	130000	168100	(-) Bad debts	1000
Add: Capital Intratued	20000		(-) RDD	750
	150000		Prepaid insurance		550
Add: Net Profit	21600		Bills receivable		29120
Add: interest capital	6500		Premises	85800	81510
	178100		(-) Depreciation	4290
Less: Drawing	10000		Vehicle	40200	36180
			(-) Depreciation	4020
		195980			195980

 

Working Notes :

1) Interest on Capital :
Opening Capital = 130,000 x `5/100` = 6,500

 

Additional capital [ 30.9.2015 ] = 20,000 x `5/100 xx 6/12`  = 500

 

Total Interest on Capital = 7,000

 

2) Reserve for doubtful debts :
    Debtors                                              = 31,000
    (-) Bad debts                                      =   1,000   
                                                               = 30,000 
    (-) R.D.D.[ 2`1/2`% on 30,000]            =      750    

 

3) Depreciation on Premises = 85,800 x `5/100` = 4,290

Depreciation on Vehicles = 40,200 x `10/100` = 4,020.