Mr. Kumar keeps his books on the Single Entry System. From the following details for the year ended 31.3.2023, prepare the Total Debtors Account, Total Creditors Account, Trading and Profit and Loss Account, and the Balance Sheet as on that date.

Balances as on 1.4.2022: Cash in

Question

Mr. Kumar keeps his books on the Single Entry System. From the following details for the year ended 31.3.2023, prepare the Total Debtors Account, Total Creditors Account, Trading and Profit and Loss Account, and the Balance Sheet as on that date.

Balances as on 1.4.2022: Cash in hand ₹5,000; Cash at Bank ₹15,000; Stock ₹40,000; Debtors ₹30,000; Furniture ₹25,000; Creditors ₹20,000.

Cash Book Summary for the year: Receipts — Cash Sales ₹50,000, Received from Debtors ₹2,10,000. Payments — Paid to Creditors ₹1,60,000, Business Expenses ₹45,000, Wages ₹20,000, Drawings ₹30,000, Purchase of Furniture ₹5,000.

Other information: Discount Allowed to Debtors ₹4,000; Discount Received from Creditors ₹3,000; Bad Debts written off ₹2,000. Balances as on 31.3.2023: Debtors ₹38,000; Creditors ₹25,000; Stock ₹45,000. Depreciate Furniture (including the addition) by 10% p.a. Outstanding Wages as on 31.3.2023 ₹2,000.

Accepted Answer

**Step 1: Opening Capital as on 1.4.2022**

Opening Capital = (5,000 + 15,000 + 40,000 + 30,000 + 25,000) − 20,000 = 1,15,000 − 20,000 = **₹95,000**

**Step 2: Total Debtors Account (finding Credit Sales)**

| Dr. | ₹ | Cr. | ₹ |
|---|---|---|---|
| To Balance b/d | 30,000 | By Cash/Bank | 2,10,000 |
| To Credit Sales (balancing figure) | 2,24,000 | By Discount Allowed | 4,000 |
| | | By Bad Debts | 2,000 |
| | | By Balance c/d | 38,000 |
| **Total** | **2,54,000** | **Total** | **2,54,000** |

Credit Sales = (2,10,000 + 4,000 + 2,000 + 38,000) − 30,000 = 2,54,000 − 30,000 = **₹2,24,000**

**Step 3: Total Creditors Account (finding Credit Purchases)**

| Dr. | ₹ | Cr. | ₹ |
|---|---|---|---|
| To Cash/Bank | 1,60,000 | By Balance b/d | 20,000 |
| To Discount Received | 3,000 | By Credit Purchases (balancing figure) | 1,68,000 |
| To Balance c/d | 25,000 | | |
| **Total** | **1,88,000** | **Total** | **1,88,000** |

Credit Purchases = (1,60,000 + 3,000 + 25,000) − 20,000 = 1,88,000 − 20,000 = **₹1,68,000**

**Step 4: Trading Account for the year ended 31.3.2023**

| Dr. | ₹ | Cr. | ₹ |
|---|---|---|---|
| To Opening Stock | 40,000 | By Sales (Cash 50,000 + Credit 2,24,000) | 2,74,000 |
| To Purchases (Credit) | 1,68,000 | By Closing Stock | 45,000 |
| To Wages (20,000 + 2,000 outstanding) | 22,000 | | |
| To Gross Profit c/d | 89,000 | | |
| **Total** | **3,19,000** | **Total** | **3,19,000** |

**Step 5: Profit and Loss Account for the year ended 31.3.2023**

| Dr. | ₹ | Cr. | ₹ |
|---|---|---|---|
| To Business Expenses | 45,000 | By Gross Profit b/d | 89,000 | …

Dr.	₹	Cr.	₹
To Balance b/d	30,000	By Cash/Bank	2,10,000
To Credit Sales (balancing figure)	2,24,000	By Discount Allowed	4,000
		By Bad Debts	2,000
		By Balance c/d	38,000
Total	2,54,000	Total	2,54,000

Dr.	₹	Cr.	₹
To Cash/Bank	1,60,000	By Balance b/d	20,000
To Discount Received	3,000	By Credit Purchases (balancing figure)	1,68,000
To Balance c/d	25,000
Total	1,88,000	Total	1,88,000

Dr.	₹	Cr.	₹
To Opening Stock	40,000	By Sales (Cash 50,000 + Credit 2,24,000)	2,74,000
To Purchases (Credit)	1,68,000	By Closing Stock	45,000
To Wages (20,000 + 2,000 outstanding)	22,000
To Gross Profit c/d	89,000
Total	3,19,000	Total	3,19,000

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