Mrs. Bhavana keeps her books by Single Entry System. You are required to prepare final accounts of her business for the year ended March 31, 2017. Her records relating to cash receipts and cash payments for the above period showed the following particulars:
Summary of Cash
| Receipts | Amount (₹) | Payments | Amount (₹) |
|---|---|---|---|
| Opening balance of cash | 12,000 | Paid to creditors | 53,000 |
| Further capital | 20,000 | Business expenses | 12,000 |
| Received from debtors | 1,20,000 | Wages paid | 30,000 |
| Bhavana's drawings | 15,000 | ||
| Balance at bank on March 31, 2017 | 35,000 | ||
| Cash in hand | 7,000 | ||
| 1,52,000 | 1,52,000 |
The following information is also available:
| Particulars | April 01, 2016 (₹) | March 31, 2017 (₹) |
|---|---|---|
| Debtors | 55,000 | 85,000 |
| Creditors | 22,000 | 29,000 |
| Stock | 35,000 | 70,000 |
| Plant | 10,00,000 | 1,00,000 |
| Machinery | 50,000 | 50,000 |
| Land & Building | 2,50,000 | 2,50,000 |
| Investment | 20,000 | 20,000 |
All her sales and purchases were on credit. Provide depreciation on plant and building by 10% and machinery by 5%, make a provision for bad debts by 5%.
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Start your 14-day free trial to unlock the full solution →Credit sales (₹1,50,000) and credit purchases (₹60,000) are found from the Total Debtors and Total Creditors accounts. The Trading Account gives Gross Profit ₹95,000; after business expenses, depreciation ₹37,500 and provision for bad debts ₹4,250, Net Profit = ₹41,250; the Balance Sheet totals ₹5,75,250.
Opening Plant is printed in the question as "10,00,000", but the closing Plant is ₹1,00,000 and no plant is sold or added during the year. This is an OCR/typographical error for ₹1,00,000; the value ₹1,00,000 is used throughout (opening capital, depreciation and Balance Sheet) so the accounts reconcile to the printed totals.
Total Debtors Account (to find credit sales)
| Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
|---|---|---|---|---|---|---|---|
| 2016 Apr 1 | To Balance b/d | — | 55,000 | By Cash A/c (received from debtors) | — | 1,20,000 | |
| To Sales A/c (credit sales) | — | 1,50,000 | 2017 Mar 31 | By Balance c/d | — | 85,000 | |
| 2,05,000 | 2,05,000 |
Total Creditors Account (to find credit purchases)
| Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
|---|---|---|---|---|---|---|---|
| To Cash A/c (paid to creditors) | — | 53,000 | 2016 Apr 1 | By Balance b/d | — | 22,000 | |
| 2017 Mar 31 | To Balance c/d | — | 29,000 | By Purchases A/c (credit purchases) | — | 60,000 | |
| 82,000 | 82,000 |
Trading and Profit & Loss Account for the year ended March 31, 2017
| Particulars | Amount (₹) | Particulars | Amount (₹) |
|---|---|---|---|
| To Opening Stock | 35,000 | By Sales (credit) | 1,50,000 |
| To Purchases (credit) | 60,000 | By Closing Stock | 70,000 |
| To Wages | 30,000 | ||
| To Gross Profit c/d | 95,000 | ||
| 2,20,000 | 2,20,000 | ||
| To Business Expenses | 12,000 | By Gross Profit b/d | 95,000 |
| To Depreciation: | |||
| Plant (1,00,000 @ 10%) | 10,000 | ||
| Land & Building (2,50,000 @ 10%) | 25,000 | ||
| Machinery (50,000 @ 5%) | 2,500 | ||
| To Provision for Bad Debts (85,000 @ 5%) | 4,250 | ||
| To Net Profit (transferred to Capital) | 41,250 | ||
| 95,000 | 95,000 |
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