Question

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

Particulars	1-1-2018 ₹	31-12-2018 ₹
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

 

Particulars	₹	Particulars	₹
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 the depreciation of 10% on machinery. Create a reserve of 1% on debtors for doubtful debts.

Answer 1

Statement of Affairs as on 1st January 2018
Liabilities	₹	Assets	₹
Bank Loan	45,000	Machinery	60,000
Creditors	25,000	Cash	25,000
Capital (B/F)	1,50,000	Debtors	70,000
		Stock	45,000
		Bills receivable	20,000
	2,20,000		2,20,000

 

Dr.	Trading Account for year ended 31st December 2018				Cr.
Particulars		₹	Particulars		₹
To Opening stock		1,20,000	By Closing stock
To Wages		65,000	By Sales	7,70,000	7,45,000
To credit purchases	6,25,000	5,95,000	(−) Sales return	25,000
(−) To Purchases return	30,000
To Gross profit		1,35,000
		9,15,000			9,15,000

 

Dr.	Profit/Loss Account for the year ended 31st December 2018		Cr.
Particulars	₹	Particulars	₹
To Depreciation	6,000	By Gross profit	1,11,000
To Provision for doubtful debts	1,000
To Salaries	23,500
To Advertisement	7,000
To Interest on loan	4,500
To Net Proft	69,000
	1,11,000		1,11,000

 

Balance Sheet as on 31st December 2018
Liabilities		₹	Assets		₹
Bank loan		45,000	Machinery	60,000	54,000
Credits		21,000	(−) Depreciation	6,000
Capital	1,50,000		Cash		33,000
(+) Net profit	6,900		Debtors	1,00,000	99,000
	2,19,000		(−) doubtful debt	1,000
(+) Additional capital	21,000		Closing stock		22,000
	2,40,000		Bills receivable		38,000
(−) Drawing	60,000	1,80,000
		2,46,000			2,46,000