M/s Saniya Sports Equipment does not keep proper records. From the following information find out profit or loss and also prepare balance sheet for the year ended March 31, 2017:
| Particulars | March 31, 2016 (₹) | March 31, 2017 (₹) |
|---|---|---|
| Cash in hand | 6,000 | 24,000 |
| Bank overdraft | 30,000 | — |
| Stock | 50,000 | 80,000 |
| Sundry creditors | 26,000 | 40,000 |
| Sundry debtors | 60,000 | 1,40,000 |
| Bills payable | 6,000 | 12,000 |
| Furniture | 40,000 | 60,000 |
| Bills receivable | 8,000 | 28,000 |
| Machinery | 50,000 | 1,00,000 |
| Investment | 30,000 | 80,000 |
Drawing ₹10,000 p.m. for personal use, fresh capital introduced during the year ₹2,00,000. A bad debt of ₹2,000 and a provision of 5% is to be made on debtors, outstanding salary ₹2,400, prepaid insurance ₹700, depreciation charged on furniture and machinery @ 10% p.a.
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Start your 14-day free trial to unlock the full solution →Opening capital ₹1,82,000. After bad debt ₹2,000, provision ₹7,000, depreciation (furniture ₹6,000, machinery ₹10,000), outstanding salary ₹2,400 and prepaid insurance ₹700, the adjusted statement of affairs totals ₹4,87,700 and adjusted closing capital is ₹4,33,300. Adding drawings ₹1,20,000 and deducting fresh capital ₹2,00,000 gives a profit of ₹1,71,300.
Opening Statement of Affairs as at March 31, 2016
| Liabilities | Amount (₹) | Assets | Amount (₹) |
|---|---|---|---|
| Bank overdraft | 30,000 | Cash in hand | 6,000 |
| Sundry creditors | 26,000 | Stock | 50,000 |
| Bills payable | 6,000 | Sundry debtors | 60,000 |
| Capital (balancing figure) | 1,82,000 | Furniture | 40,000 |
| Bills receivable | 8,000 | ||
| Machinery | 50,000 | ||
| Investment | 30,000 | ||
| Total | 2,44,000 | Total | 2,44,000 |
Closing Statement of Affairs as at March 31, 2017 (before adjustments)
| Liabilities | Amount (₹) | Assets | Amount (₹) |
|---|---|---|---|
| Sundry creditors | 40,000 | Cash in hand | 24,000 |
| Bills payable | 12,000 | Stock | 80,000 |
| Capital (balancing figure) | 4,60,000 | Sundry debtors | 1,40,000 |
| Furniture | 60,000 | ||
| Bills receivable | 28,000 | ||
| Machinery | 1,00,000 | ||
| Investment | 80,000 | ||
| Total | 5,12,000 | Total | 5,12,000 |
Adjustments: bad debt ₹2,000 written off; provision for doubtful debts @ 5% on debtors ₹1,40,000 = ₹7,000 (net debtors = 1,40,000 − 2,000 − 7,000 = ₹1,31,000); depreciation on furniture @ 10% = ₹6,000 (→ ₹54,000) and on machinery @ 10% = ₹10,000 (→ ₹90,000); outstanding salary ₹2,400 (a liability); prepaid insurance ₹700 (an asset).
Adjusted Statement of Affairs as at March 31, 2017
| Liabilities | Amount (₹) | Assets | Amount (₹) |
|---|---|---|---|
| Sundry creditors | 40,000 | Cash in hand | 24,000 |
| Bills payable | 12,000 | Stock | 80,000 |
| Outstanding salary | 2,400 | Sundry debtors (1,40,000 − 2,000 − 7,000) | 1,31,000 |
| Capital (balancing figure) | 4,33,300 | Bills receivable | 28,000 |
| Furniture (60,000 − 6,000) | 54,000 | ||
| Machinery (1,00,000 − 10,000) | 90,000 | ||
| Investment | 80,000 | ||
| Prepaid insurance | 700 | ||
| Total | 4,87,700 | Total | 4,87,700 |
Statement of Profit or Loss for the year ended March 31, 2017
| Particulars | Amount (₹) |
|---|---|
| Adjusted capital at the end (31.03.2017) | 4,33,300 |
| Add: Drawings during the year (₹10,000 × 12) | 1,20,000 |
| 5,53,300 | |
| Less: Fresh capital introduced | 2,00,000 |
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