Dinesh does not keep systematic books of account due to lack of knowledge about the double entry system of accounting. He supplies you the following information:

**(i) Assets and Liabilities**

| Particulars | April 01, 2016 (₹) | March 31, 2017 (₹) |
|---|---|---|
| Sundry debt

Question

Dinesh does not keep systematic books of account due to lack of knowledge about the double entry system of accounting. He supplies you the following information:

**(i) Assets and Liabilities**

| Particulars | April 01, 2016 (₹) | March 31, 2017 (₹) |
|---|---|---|
| Sundry debtors | 45,000 | 48,600 |
| Sundry creditors | 24,000 | ? |
| Cash | 4,500 | ? |
| Furniture and Fixtures | 15,000 | ? |
| Stock | 25,000 | ? |
| Motor Van | 16,000 | ? |

**(ii) Transaction during the year**

| Particulars | Amount (₹) |
|---|---|
| Cash received from debtors | 80,000 |
| Discount allowed to debtors | 1,400 |
| Bad debts written off | 1,800 |
| Cash paid to creditors | 63,000 |
| Discount allowed by creditors | 1,000 |
| Sales return | 3,000 |
| Purchases return | 2,000 |
| Expenses paid | 6,000 |
| Drawings | 5,000 |
| Rent paid | 2,500 |

**(iii) Other Information**

Outstanding expenses ₹1,200. Charge 10 per cent depreciation on furniture and 5 per cent on motor van. Dinesh informs that he sells goods at cost plus 40 per cent. A provision of 5 per cent on debtors is to be created. Prepare his trading and profit and loss account and balance sheet as on March 31, 2017.

Accepted Answer

> [!TLDR]
> Sales ₹89,800, purchases ₹69,000, closing cash ₹8,000, opening capital ₹81,500 and closing stock ₹30,000 are worked out first; the Trading and P&L Account then shows gross profit ₹24,800 and net profit ₹8,170, and the Balance Sheet totals ₹1,12,870.

**Books of Dinesh — Trading and Profit and Loss Account for the year ending March 31, 2017**

| Expenses/Losses | Amount (₹) | Revenues/Gains | Amount (₹) |
|---|---|---|---|
| Opening stock | 25,000 | Sales ₹89,800 less Returns ₹3,000 | 86,800 |
| Purchases ₹69,000 less Returns ₹2,000 | 67,000 | Closing stock | 30,000 |
| Gross profit c/d | 24,800 |  |  |
| **Total** | **1,16,800** | **Total** | **1,16,800** |

| Expenses/Losses | Amount (₹) | Revenues/Gains | Amount (₹) |
|---|---|---|---|
| Discount allowed | 1,400 | Gross profit b/d | 24,800 |
| Bad debts | 1,800 | Discount received | 1,000 |
| Expenses paid ₹6,000 add Outstanding expenses ₹1,200 | 7,200 |  |  |
| Rent paid | 2,500 |  |  |
| Depreciation (Furniture ₹1,500 + Motor van ₹800) | 2,300 |  |  |
| Provision for doubtful debts | 2,430 |  |  |
| Net profit (transferred to capital account) | 8,170 |  |  |
| **Total** | **25,800** | **Total** | **25,800** |

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

| Liabilities | Amount (₹) | Assets | Amount (₹) |
|---|---|---|---|
| Outstanding expenses | 1,200 | Cash | 8,000 |
| Creditors | 27,000 | Debtors (₹48,600 − Provision ₹2,430) | 46,170 |
| Capital (₹81,500 − Drawings ₹5,000 + Net profit ₹8,170) | 84,670 | Closing stock | 30,000 |
|  |  | Furniture & Fixtures (₹15,000 − Depreciation ₹1,500) | 13,500 |
|  |  | Motor van (₹16,000 − Depreciation ₹800) | 15,200 |
| **Total** | **1,12,870** | **Total** | **1,12,870** |

**Working Notes**

**(i) Total Debtors Account**

| Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
|---|---|---|---|---|---|---|---|
|  | Balance b/d |  | 45,000 |  | Cash received |  | 80,000 |
|  | Sales (balancing figure) |  | 89,800 |  | Discount allowed |

Particulars	April 01, 2016 (₹)	March 31, 2017 (₹)
Sundry debtors	45,000	48,600
Sundry creditors	24,000	?
Cash	4,500	?
Furniture and Fixtures	15,000	?
Stock	25,000	?
Motor Van	16,000	?

Particulars	Amount (₹)
Cash received from debtors	80,000
Discount allowed to debtors	1,400
Bad debts written off	1,800
Cash paid to creditors	63,000
Discount allowed by creditors	1,000
Sales return	3,000
Purchases return	2,000
Expenses paid	6,000
Drawings	5,000
Rent paid	2,500

Expenses/Losses	Amount (₹)	Revenues/Gains	Amount (₹)
Opening stock	25,000	Sales ₹89,800 less Returns ₹3,000	86,800
Purchases ₹69,000 less Returns ₹2,000	67,000	Closing stock	30,000
Gross profit c/d	24,800
Total	1,16,800	Total	1,16,800

Expenses/Losses	Amount (₹)	Revenues/Gains	Amount (₹)
Discount allowed	1,400	Gross profit b/d	24,800
Bad debts	1,800	Discount received	1,000
Expenses paid ₹6,000 add Outstanding expenses ₹1,200	7,200
Rent paid	2,500
Depreciation (Furniture ₹1,500 + Motor van ₹800)	2,300
Provision for doubtful debts	2,430
Net profit (transferred to capital account)	8,170
Total	25,800	Total	25,800

Liabilities	Amount (₹)	Assets	Amount (₹)
Outstanding expenses	1,200	Cash	8,000
Creditors	27,000	Debtors (₹48,600 − Provision ₹2,430)	46,170
Capital (₹81,500 − Drawings ₹5,000 + Net profit ₹8,170)	84,670	Closing stock	30,000
		Furniture & Fixtures (₹15,000 − Depreciation ₹1,500)	13,500
		Motor van (₹16,000 − Depreciation ₹800)	15,200
Total	1,12,870	Total	1,12,870

Particulars	Amount (₹)	Particulars	Amount (₹)
Balance b/d	45,000	Cash received	80,000
Sales (balancing figure)	89,800	Discount allowed	1,400
		Bad debts	1,800
		Sales return	3,000
		Balance c/d	48,600
Total	1,34,800	Total	1,34,800

Particulars	Amount (₹)	Particulars	Amount (₹)
Cash paid	63,000	Balance b/d	24,000
Discount received	1,000	Purchases (balancing figure)	69,000
Purchases return	2,000
Balance c/d	27,000
Total	93,000	Total	93,000

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