Question

Mr. Tate's financial position on 1 December, 2018 was as follows:

Stock ₹ 4,460; Debtors ₹ 890; Creditors ₹ 2 400; Cash ₹ 500; and Fixed assets ₹ 3,000.

1. Draw up a statement to show his assets, liabilities and capital on 1.12.2018.
2. During the month of December, 2018, the following transactions took place; Sold goods for cash ₹ 4.000; sold the balance goods on credit for ₹ 3 000; received ₹ 2 000 from debtors; paid ₹ 900 to creditors; withdrew ₹ 400 for personal use; allowed and accounted a direct payment of ₹ 500 by a debtor to one of the creditors.

Draw up a statement of his financial position at the end of the month of December 2018.

Answer 1

(a) 

Balance Sheet as on 30.11.2018
Liabilities	Amount (₹)	Assets	Amount (₹)
Creditors	2,400	Closing Stock	4,460
Capital (Balancing Figure)	6,450	Debtors	890
		Fixed Asset	3,000
		Cash	500
	8,850		8,850

(b)

Dr.	Cash Account as on 31.12.2018		Cr.
Receipts	Amount (₹)	Payments	Amount (₹)
Balance b/d	500	Creditors	900
Sale	4,000	Drawings	400
Debtors	2,000	Balance c/d	5,200
	6,500		6,500

 

Dr.	Trading and Profit & Loss Account as on 31.12.2018		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Opening Stock	4,460	By Sale	7,000
To Profit (Balancing figure)	2,540
	7,000		7,000

 

Balance Sheet as on 31.12.2018
Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)
Capital	6,450	8,590	Closing Stock	-
Add: Profit earned	2,540		Debtors (890 + 3,000 − 2,000 − 500)	1,390
	8,990		Fixed Asset	3,000
Less: Drawings	(400)		Cash	5,200
Creditors (2,400 − 900 − 500)	-	1,000
		9,590		9,590