Mr. Bahadur does not know how to keep books of account. From his various records, the following particulars have been made available. Prepare the final Accounts, after providing for doubtful debts 5 per cent of debtors outstanding and depreciating the motor car @ 20 per cent.

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Question

Mr. Bahadur does not know how to keep books of account. From his various records, the following particulars have been made available. Prepare the final Accounts, after providing for doubtful debts 5 per cent of debtors outstanding and depreciating the motor car @ 20 per cent.

**(i) Balance Sheet as on April 1, 2016**

| Liabilities | Amount (₹) | Assets | Amount (₹) |
|---|---|---|---|
| Capital | 92,500 | Motor Car | 71,700 |
| Bills payable | 32,800 | Stock | 51,500 |
| Creditors | 84,200 | Debtors | 49,500 |
|  |  | Bills receivable | 24,400 |
|  |  | Cash in hand | 12,400 |
| **Total** | **2,09,500** | **Total** | **2,09,500** |

**(ii) Cash Transactions during the year**

| Receipts | Amount (₹) | Payments | Amount (₹) |
|---|---|---|---|
| Balance b/d | 12,400 | Furniture | 30,000 |
| Receipt from debtors | 1,15,000 | Wages | 9,400 |
| Bills receivable | 14,200 | Purchases | 40,500 |
| Sales | 1,03,000 | Drawings | 24,000 |
|  |  | Bills payable | 30,700 |
|  |  | General expenses | 20,700 |
|  |  | Payment to creditors | 80,800 |
|  |  | Balance c/d | 8,500 |
| **Total** | **2,44,600** | **Total** | **2,44,600** |

**(iii) Other Information**

| Particulars | Amount (₹) |
|---|---|
| Bills receivable drawn (received) | 6,300 |
| Discount to customers | 2,300 |
| Discount from suppliers | 700 |
| Credit purchases | 29,600 |
| Closing stock | 41,700 |
| Closing balance of debtor | 55,000 |
| Closing balance of bills payable | 10,200 |

Accepted Answer

> [!TLDR]
> Credit sales ₹1,29,100, bills received ₹6,300, bills accepted ₹8,100 and closing creditors ₹24,200 are worked out first; the Trading and P&L Account then shows gross profit ₹1,42,800 and net profit ₹1,03,410, and the Balance Sheet totals ₹2,06,310.

Cash sales and cash purchases are available from the cash transactions, and credit purchases are given. Credit sales are ascertained from the total debtors account, and since the closing balance of creditors is not known, the total creditors account is also opened. Because bills payable and bills receivable exist, those accounts are opened too.

**Books of Mr. Bahadur — Trading and Profit and Loss Account for the year ended March 31, 2017**

| Expenses/Losses | Amount (₹) | Revenues/Gains | Amount (₹) |
|---|---|---|---|
| Opening stock | 51,500 | Sales (Cash ₹1,03,000 + Credit ₹1,29,100) | 2,32,100 |
| Purchases (Cash ₹40,500 + Credit ₹29,600) | 70,100 | Closing stock | 41,700 |
| Wages | 9,400 |  |  |
| Gross profit c/d | 1,42,800 |  |  |
| **Total** | **2,73,800** | **Total** | **2,73,800** |

| Expenses/Losses | Amount (₹) | Revenues/Gains | Amount (₹) |
|---|---|---|---|
| General expenses | 20,700 | Gross profit b/d | 1,42,800 |
| Discount allowed | 2,300 | Discount received | 700 |
| Depreciation on motor car | 14,340 |  |  |
| Reserve for bad debts | 2,750 |  |  |
| Net profit | 1,03,410 |  |  |
| **Total** | **1,43,500** | **Total** | **1,43,500** |

**Balance Sheet as at March 31, 2017**

| Liabilities | Amount (₹) | Assets | Amount (₹) |
|---|---|---|---|
| Capital (₹92,500 + Net profit ₹1,03,410 − Drawings ₹24,000) | 1,71,910 | Motor car (₹71,700 − Depreciation ₹14,340) | 57,360 |
| Creditors | 24,200 | Furniture | 30,000 |
| Bills payable | 10,200 | Stock | 41,700 |
|  |  | Debtors (₹55,000 − Provision ₹2,750) | 52,250 |
|  |  | Bills receivable | 16,500 |
|  |  | Cash | 8,500 |
| **Total** | **2,06,310** | **Total** | **2,06,310** |

**Working Notes**

**(i) Total Bills Receivable Account**

| D

Liabilities	Amount (₹)	Assets	Amount (₹)
Capital	92,500	Motor Car	71,700
Bills payable	32,800	Stock	51,500
Creditors	84,200	Debtors	49,500
		Bills receivable	24,400
		Cash in hand	12,400
Total	2,09,500	Total	2,09,500

Receipts	Amount (₹)	Payments	Amount (₹)
Balance b/d	12,400	Furniture	30,000
Receipt from debtors	1,15,000	Wages	9,400
Bills receivable	14,200	Purchases	40,500
Sales	1,03,000	Drawings	24,000
		Bills payable	30,700
		General expenses	20,700
		Payment to creditors	80,800
		Balance c/d	8,500
Total	2,44,600	Total	2,44,600

Particulars	Amount (₹)
Bills receivable drawn (received)	6,300
Discount to customers	2,300
Discount from suppliers	700
Credit purchases	29,600
Closing stock	41,700
Closing balance of debtor	55,000
Closing balance of bills payable	10,200

Expenses/Losses	Amount (₹)	Revenues/Gains	Amount (₹)
Opening stock	51,500	Sales (Cash ₹1,03,000 + Credit ₹1,29,100)	2,32,100
Purchases (Cash ₹40,500 + Credit ₹29,600)	70,100	Closing stock	41,700
Wages	9,400
Gross profit c/d	1,42,800
Total	2,73,800	Total	2,73,800

Expenses/Losses	Amount (₹)	Revenues/Gains	Amount (₹)
General expenses	20,700	Gross profit b/d	1,42,800
Discount allowed	2,300	Discount received	700
Depreciation on motor car	14,340
Reserve for bad debts	2,750
Net profit	1,03,410
Total	1,43,500	Total	1,43,500

Liabilities	Amount (₹)	Assets	Amount (₹)
Capital (₹92,500 + Net profit ₹1,03,410 − Drawings ₹24,000)	1,71,910	Motor car (₹71,700 − Depreciation ₹14,340)	57,360
Creditors	24,200	Furniture	30,000
Bills payable	10,200	Stock	41,700
		Debtors (₹55,000 − Provision ₹2,750)	52,250
		Bills receivable	16,500
		Cash	8,500
Total	2,06,310	Total	2,06,310

Particulars	Amount (₹)	Particulars	Amount (₹)
Balance b/d	24,400	Cash (receipt)	14,200
Debtors (bills drawn) (balancing figure)	6,300	Balance c/d	16,500
Total	30,700	Total	30,700

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