Question

Mr. Yogesh keeps his books on Single Entry system. From the following particulars, prepare Opening and Closing Statement of Affairs and Statement of Profit and Loss.   

Particulars	Amount (Rs) on 1.4.2009	Amount (Rs) on 31.3.2010
Bank balance Cash balance Sundry debtors Stock Furniture Machinery Sundry creditors Bills payable	36,000 7,500 90,000 60,000 9,000 60,000 36,000 16,500	27,000 9,000 1,20,000 90,000 9,000 90,000 60,000 27,000

Additional information:

(1) Mr. Yogesh has withdrawn Rs 22,500 from the business for his personal use.

(2) He has introduced additional capital of Rs 7,500 in the business on 1st January, 2010.

(3) Additions to machinery were made on 1st January, 2010.

(4) Depreciate furniture and machinery @ 10% p.a.

(5) Maintain reserve for doubtful debts @ 2% on sundry debtors.

(6) Closing stock is overvalued by 20% in the books.

Answer 1

Mr. Yogesh 

statement of Affairs 

as on March 31, 2009

Liabilities	Amount (Rs)	Assets	Amount (Rs)
Creditors	36,000	Cash in Hand	7,500
Bills Payable	16,500	Cash at Bank	36,000
Capital (Balancing Figure)	2,10,000	Sundry Debtors	90,000
		Stock	60,000
		Furniture	9,000
		Machinery	60,000
	2,62,500		2,62,500

statement of Affairs 

as on March 31, 2010

Liabilities	Amount (Rs)	Assets		Amount (Rs)
Creditors	60,000	Cash in Hand		9,000
Bills Payable	27,000	Cash at Bank		27,000
Capital (Balancing Figure)	2,32,950	Sundry Debtors	1,20,000
		Less: Provision for Doubtful Debt	2,400	1,17,600
		Stock	90,000
		Less: Over valuation	15,000	75,000
		Furniture	9,000
		Less: Depreciation @ 10%	900	8,100
		Machinery	90,000
		Less: Depreciation	6,750	83,250
	3,19,950			3,19,950

Statement of Profit and Loss

For the year ended March 31, 2010

Particulars		Amount (Rs)
Capital at the end of the year (as on March 31,2010)		2,32,950
	Add: Drawings made during the year	22,500
	Less: Additional capital introduced during the year	7,500
Adjusted capital at the end of the year 31.03.10		2,47,950
	Less: Capital in the beginning of the year 31.03.09	2,10,000
Profit for the year		37,950

Working Notes:

WN1 Calculation of Provision for Doubtful Debts

\[\text{Provision for Doubtful Debt} = 1,20,000 \times \frac{2}{100} = Rs\ 2, 400\]

 

WN2 Calculation of Over-Value of Closing Stock

\[\text{Over valuation of stock} = 90,000 \times \frac{20}{120} = Rs\ 15, 000\]

 

WN3 Calculation of Depreciation of Furniture

\[\text{Depreciation on Furniture} = 90,000 \times \frac{10}{100} = Rs\ 900\]

 

WN4 Calculation of Depreciation of Machinery

 

\[\begin{array}{l}\text{Depreciation on Machinery (from Apr. 01, 2009 to Mar}. 31, 2010) = 60,000 \times \frac{10}{100} = Rs 6, 000 \\ \text{Depreciation on Additional Machinery (for 3 months)} = 30,000 \times \frac{10}{100} \times \frac{3}{12} = Rs 750 \\ \text{Total Depreciation Charged on Machinery} = 6, 000 + 750 = Rs 6, 750\end{array}\]