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Question-1

State the meaning of incomplete records?

Solution:
Accounts from Incomplete Records or Single Entry System is a system in which accounting records are not kept according to double entry principle of book keeping.

 

Unlike Double Entry System in Single Entry System, no set rules are followed – even the books of accounts to be maintained are not certain.

Question-2

What are the possible reasons for keeping incomplete records?

Solution:
The reasons for maintaining records under single entry system are as follows:
  People who do not possess exclusive knowledge of accounting principles.
  Cost for maintaining accounts under this method is less
  The time required to prepare and maintain records is less under this method
  It is convenient because only the entries that are important are recorded

 

Question-3

Distinguish between statement of affairs and balance sheet.

Solution:

S. No

Statement of affairs

Balance Sheet

1.

A statement of affairs is prepared on the basis of some ledger accounts and estimates

A Balance Sheet is prepared on the basis of ledger accounts.

2.

The arithmetical accuracy of the accounting records cannot be proved because it is not prepared on the basis of a trial balance

The tallied Balance Sheet proves the arithmetical accuracy since it is based on the trial balance.

3.

It is prepared for ascertaining the a capital of a business.

It is prepared for ascertaining the financial position of a business.

4.

The value of assets and liabilities shown in it are mere estimated on the basis of physical inspection.

The value of assets and liabilities shown in a Balance Sheet are the actual values based on ledger accounts.

5.

It is not possible to locate the omission of an asset or a liability

Omission of an asset or a liability will be easily detected because the Balance Sheet will not tally.

 

Question-4

What practical difficulties are encountered by a trader due to incompleteness of accounting records?

Solution:

1

Arithmetical Accuracy cannot be proved

Trial Balance cannot be prepared and hence, arithmetical accuracy of books cannot be proved or tested. Chances of error, mischief or fraud remaining undetected are high.

2

No control on assets

Since asset accounts are not maintained, it may be difficult to keep full control, in order to avoid misappropriations of assets

3

True profits cannot be known

Trading and Profit and Loss Account cannot be prepared and hence the correct profit earned or loss suffered during the accounting period is not known

4

Financial position of the business cannot be judged

Balance sheet, called Statement of Affairs under Single Entry System, is prepared in an unsatisfactory manner. The assets and liabilities are not provided from records but are put down by physical inspection and on estimated basis. Thus, exact position of total net assets cannot be known

5

No Internal Check

Since internal check is not possible, the method gives enough room for errors and frauds, besides their detection very difficult

 

 

Question-5

What is meant by a ‘statement of affairs’? How can the profit or loss of a trader be ascertained with the help of a statement of affairs?

Solution:
To ascertain profit, according to Single Entry System, it is necessary to prepare a statement of affairs at the end of the year and also at the beginning of the year, if not already prepared. Like the Balance Sheet, the statement of affairs has two sides – the right hand side for assets and the left hand side for liabilities. To prepare the statement, information has to be collected from various sources. Information about assets will be available from the Cash book, the Personal Ledger etc. The value of the closing stock will be ascertained by preparing stock sheets and valuing the stock in hand, at lower of cost and market value. If the trader has any other assets, like furniture, machinery etc., the value will be ascertained and included among the assets. The business is likely to have full knowledge of the amounts owing to third parties. The difference between the total of assets and liabilities will be capital.

Capital = Total Assets - Liabilities

For ascertaining profit the capital in the beginning of the year must also be ascertained, if necessary, by preparing a statement of affairs as at the beginning of the year. If the capital at the end of the year exceeds that at the beginning, we can say that there has been a profit. If on the other hand, the capital in the beginning was more that that at the end, there must have been a loss. However, two adjustments must be borne in mind for ascertaining profit.

a. Adjustments in capital introduced – If the proprietor brought in some additional capital during the year, it should be deducted from the capital at the end (since this increase is not due to profit but fresh introduction of capital ); and

b. Adjustments for Drawings – The drawings of the proprietor should be added to the capital at the end – had the drawings not been made, the capital at the end of the year would be higher.

Formula for Determining Profit is as follows:

Profit = (Capital at the end + Drawings - Additional Capital Introduced - Capital at the Begining).

 

Question-6

‘Is it possible to prepare the profit and loss account and the balance sheet from the incomplete book of accounts kept by a trader’? Do you agree? Explain.

Solution:
The main purpose of any business is to earn profit. Every business owner, therefore, is desirous to know whether he has earned profit or incurred loss after a certain period of time generally after the end of a year. In fact, to ascertain profit or loss becomes all the more essential if the business happens to be a partnership firm because the partners have to share the profits of the firm at the end of the each accounting period. Then, the question arises as to how to ascertain profits when the accounting records are incomplete, accounts are maintained under the Single Entry System. The reason is that Profit and Loss Account cannot be prepared in the absence of Trial Balance. In such a situation, there are two methods used for ascertaining profits of the business. They are:

a. Net Worth Method or Statement of Affairs Method and

b. Conversion Method

Net Worth Method or Statement of Affairs Method

To ascertain profit, according to Single Entry System, it is necessary to prepare a statement of affairs at the end of the year and also at the beginning of the year, if not already prepared. Like the Balance Sheet, the statement of affairs has two sides – the right hand side for assets and the left hand side for liabilities. To prepare the statement, information has to be collected from various sources. Information about assets will be available from the Cash book, the Personal Ledger etc. The value of the closing stock will be ascertained by preparing stock sheets and valuing the stock in hand, at lower of cost and market value. If the trader has any other assets, like furniture, machinery etc., the value will be ascertained and included among the assets. The business is likely to have full knowledge of the amounts owing to third parties. The difference between the total of assets and liabilities will be capital.

Preparation of Final Accounts from Incomplete Records

 

We have discussed ‘net worth method’ for ascertaining business results, i.e., profits. But under this method certain vital information (e.g., sales, purchases and operating expenses) is not available from incomplete records. We can get such information by adopting ‘conversion method’. Conversion method means converting the accounts from single entry to double entry.

 

The steps involved in converting single entry into double entry are:

 

1. Prepare Cash and Bank Summary: If not available in proper form with both sides tallied, then ascertain the missing information.

2. Prepare Total Debtors Account: To ascertain missing information such as opening/closing balances, credit sales, cash received from debtors, Bills Receivable drawn).

3. Prepare Bills Receivable Account: To ascertain the missing information such as opening/closing balances, Bills receivable drawn, Bills receivable collected, Bills Receivable endorsed).

4. Prepare Total Creditors Account: To ascertain the missing information such as Opening/closing creditors, credit purchases, Bills Payable accepted, Bills Receivable endorsed, payment made to creditors.

5. Prepare Bills Payable Account: To ascertain the missing information such as opening/closing balances, Bills Payable accepted, Bills payable discharged.

6. Prepare Stock Account: To ascertain the missing information such opening/closing stocks, total purchases, cost of goods sold etc.

7. Prepare Revenue Expense Account: To ascertain the missing information such as opening /closing balances of outstanding/prepaid expenses, current year’s expenses, and expense paid.

8. Prepare Revenue Income Account: To ascertain the missing information such as opening /closing balances of accrued/unaccrued income, current year’s incomes or income received.

9. Prepare Fixed Asset Account: To ascertain the missing figures such as opening closing balances, purchase/sale, profit or loss on sale, depreciation etc.

One should bear in mind that the summary of the cash book will also reveal

a. Purchases of fixed assets or investments

b. Repayment of loans

c. Sale of fixed assets

d. Loans taken by the firm

These do not concern the Profit and Loss account; the relevant balance sheet items will be adjusted.

10. Prepare Opening Statement of Affairs: To find out capital in the beginning.

11. Now prepare, Trading Account, Profit and Loss Account and Balance Sheet from the various information given in the question and from the computation made in above. Before preparing the final accounts, Trial Balance may also be prepared to check the arithmetical accuracy.

Question-7

Ascertainment of profit or loss by statement of affairs method

Following information is given below prepare the statement of profit or loss:

 

Rs.

Capital at the end of the year 5,00,000
Capital in the beginning of the year 7,50,000
Drawings made during the period 3,75,000
Additional Capital introduced 50,000

Solution:

Particulars

Amount (Rs.)

Capital at the end of the year

5,00,000

Add: Drawings 3,75,000
  8,75,000
Less: Additional Capital introduced 50,000
  8,25,000
Less: Opening capital 7,50,000
  75,000

Question-8

Manveer started his business on January 01, 2005 with a capital of Rs. 4,50,000. On December 31, 2005 his position was as under:
 

Rs.

Cash 99,000
Bills receivable 75,000
Plant 48,000
Land and Building 1,80,000
Furniture 50,000

He owned Rs. 45,000 from his friend Susheel on that date. He withdrew Rs. 8,000 per month for his household purposes. Ascertain his profit or loss for this year ended December 31, 2005.


Solution:

Statement of affairs as on 31st December, 2005

Particulars

Amount (Rs)

Particulars

Amount (Rs)

Sundry Creditors

45,000

Cash 99,000

Capital (Bal. fig)

4,07,000

Bills Receivable 75,000
    Plant 48,000
    Land and Building 1,80,000
    Furniture 50,000
 

4,52,000

 

4,52,000

Statement of profit or loss for the period ended 31st December, 2005

Particulars

Amount (Rs)

Capital at the end of the year

4,07,000
Add: Drawings 96,000
  5,03,000
Less: Opening Capital 4,50,000
Profit 53,000

 

Question-9

From the information given below ascertain the profit for the year:
 
 

Rs.

Capital at the beginning of the year 70,000
Additional capital introduced during the year 17,500
Stock 59,500
Sundry debtors 25,900
Business premises 8,600
Machinery 2,100
Sundry creditors 33,400
Drawings made during the year 26,400

Solution:

Statement of affairs as on 31st December, 2005

Particulars

Amount (Rs)

Particulars

Amount (Rs)

Sundry Creditors

33,400

Sundry debtors

25,900

Capital at the end of the year (bal fig)

62,700

Business premises

  8,600

   

Machinery

  2,100

   

Stock

59,500

 

96,100

 

96,100

Statement of profit or loss for the period ended 31st December, 2005

Particulars

Amount (Rs)

Capital at the end of the year

62,700

Add: Drawings 26,400
  89,100
Less: Additional capital introduced 17,500
  71,600
Less: Opening Capital 70,000
Profit 1,600

 

Question-10

From the following information, Calculate Capital at the beginning:
 
 

Rs.

Capital at the end of the year 4,00,000
Drawings made during the year 60,000
Fresh Capital introduce during the year 1,00,000
Profit of the current year 80,000

Solution:
Statement of profit or loss for the period ended 31st December, 2005
 

Particulars

Amount (Rs)

Capital at the end of the year

4,00,000

Add: Drawings 60,000
  4,60,000
Less: Additional capital introduced 1,00,000
  3,60,000
Less: Profit 80,000
Capital at the beginning of the year 2,80,000

Question-11

Following information is given below: Calculate the closing capital.
 
  Jan. 01, 2005 Dec. 31, 2005
 

Rs.

Rs.

Creditors 5,000 30,000
Bills payable 10,000  -
Loan  - 50,000
Bills receivable 30,000 50,000
Stock 5,000 30,000
Cash 2,000 20,000

Calculation of profit or loss and ascertainment of statement of affairs at the end of the year (Opening Balance is given)


Solution:

Liabilities

Jan 01, 2005

Dec 31, 2005

Assets

Jan 01, 2005

Dec 31, 2005

Creditors

  5,000

  30,000

Bills receivable

30,000

50,000

Bills payable

10,000

-

Stock

  5,000

30,000

Loan

-

  50,000

Cash

  2,000

20,000

Capital

22,000

  20,000

     
   

1,00,000

   

1,00,000

 

Question-12

Mr. Arnav does not keep proper records of his business he provided following information, you are required to prepare a statement showing the profit or loss for the year.
 
 

Rs.

Capital at the beginning of the year 15,00,000
Bills receivable 60,000
Cash in hand 80,000
Furniture 9,00,000
Building 10,00,000
Creditors 6,00,000
Stock in trade 2,00,000
Further capital introduced 3,20,000
Drawings made during the period 80,000

Ascertainment of statement of affairs at the beginning and at the end of the year and calculation of profit or loss. 


Solution:

Particulars

Amount (Rs)

Particulars

Amount (Rs)

Creditors

  6,00,000

Bills receivable

  60,000

Capital (bal fig)

16,40,000

Cash in hand

  80,000

   

Furniture

9,00,000

   

Building

10,00,000

   

Stock in trade

2,00,000

 

22,40,000

 

22,40,000

Statement of profit or loss for the period ended 31st December, 2005

Particulars

Amount (Rs)

Capital at the end of the year

16,40,000

Add: Drawings 80,000
  17,20,000
Less: Additional capital introduced 3,20,000
  14,00,000
Less: Capital at the beginning of the year 15,00,000
Loss 1,00,000

 

Question-13

Mr. Akshat keeps his books on incomplete records following information is given below:
 
  April 01, 2004 March 31, 2005
  Rs. Rs.
Cash in hand 1,000 1,500
Cash at bank 15,000 10,000
Stock 1,00,000 95,000
Debtors 42,500 70,000
Business premises 75,000 1,35,000
Furniture 9,000 7,500
Creditors 66,000 87,000
Bills payable 44,000 58,000

During the year he withdrew Rs. 45,000 and introduced Rs. 25,000 as further capital in the business compute the profit or loss of the business.


Solution:
Dr.

Cr.

Liabilities

Jan 01, 2005

Dec 31, 2005

Assets

Jan 01, 2005

Dec 31, 2005

Creditors

  66,000

  87,000

Cash in hand

    1,000

    1,500

Bills Payable

  44,000

  58,000

Cash at Bank

  15,000

  10,000

Capital (bal fig)

1,32,500

1,74,000

Stock

1,00,000

   95,000

     

Debtors

  42,500

   70,000

     

Business premises

  75,000

1,35 000

     

Furniture

   9,000

    7,500

 

2,42,500

3,19,000

 

2,42,500

3,19,000

Statement of profit or loss for the period ended 31st December, 2005

Particulars

Amount (Rs)

Capital at the end of the year

1,74,000

Add: Drawings 45,000
  2,19,000
Less: Additional capital introduced 25,000
  1,94,000
Less: Capital at the beginning of the year 1,32,500
Profit 61,500

 

Question-14

Gopal does not keep proper books of account. Following information is given below:
 
  Jan. 01, 2005 Dec. 31, 2005
  Rs. Rs.
Cash in hand 18,000 12,000
Cash at bank 1,500 2,000
Stock in trade 80,000 90,000
Sundry debtors 36,000 60,000
Sundry creditors 60,000 40,000
Loan 10,000 8,000
Office equipments 25,000 30,000
Land and Buildings 30,000 20,000
Furniture 10,000 10,000

During the year he introduced Rs. 20,000 and withdrew Rs. 12,000 from the business. Prepare the statement of profit or loss on the basis of given information

 

 


Solution:
Dr.  

Cr.

Liabilities

Jan 01, 2005

Dec 31, 2005

Assets

Jan 01, 2005

Dec 31, 2005

Sundry creditors

  60,000

40,000

Cash in hand

18,000

12,000

Loan

  10,000

  8,000

Cash at Bank

  1,500

  2,000

Capital (Bal fig)

1,30,500

1,76,000

Stock in trade

80,000

90,000

     

Sundry debtors

36,000

60,000

     

Office equipment

25,000

30,000

     

Land & Buildings

30,000

20,000

     

Furniture

10,000

10,000

 

2,00,500

2,24,000

 

2,00,500

2,24,000

Statement of profit or loss for the period ended 31st December, 2005

Particulars

Amount (Rs)

Capital at the end of the year

1,76,000

Add: Drawings 12,000
  1,88,000
Less: Additional capital introduced 20,000
  1,68,000
Less: Capital at the beginning of the year 1,30,500
Profit 27,500

 

Question-15

Mr. Muneesh maintains his books of accounts from incomplete records. His books provide the information:
 

 

  Jan. 01, 2005 Dec. 31, 2005
 

Rs.

Rs.

Cash 1,200  
Bills receivable  - 2,400
Debtors 16,800 27,200
Stock 22,400 24,400
Investment  - 8,000
Furniture 7,500 8,000
Creditors 14,000 15,200

He withdrew Rs. 300 per month for personal expenses. He sold his investment of Rs. 16,000 at 2% premium and introduced that amount into business.


Solution:
Dr.  

Cr.

Liabilities

Jan 01, 2005

Dec 31, 2005

Assets

Jan 01, 2005

Dec 31, 2005

Creditors

14,000

15,200

Cash

  1,200

 1,600

Capital (bal fig)

33,900

56,400

Bills receivable

-

 2,400

     

Debtors

16,800

27,200

     

Stock

22,400

24,400

     

Investment

-

  8,000

     

Furniture

  7,500

  8,000

           
 

47,900

71,600

 

47,900

71,600

Statement of profit or loss for the period ended 31st December, 2005

Particulars

Amount (Rs)

Capital at the end of the year

56,400

Add: Drawings 3,600
  60,000
Less: Additional capital introduced 16,320
  43,680
Less: Capital at the beginning of the year 33,900
Profit 9,780

 

Question-16

Mr. Girdhari Lal does not keep full double entry records. His balance as on January 01, 2006 is as.
 
Liabilities

Amount Rs.

Assets Amount Rs.
Sundry creditors 35,000 Cash in hand 5,000
Bills payable 15,000 Cash at bank 20,000
Capital 40,000 Sundry debtors 18,000
    Stock 22,000
    Furniture 8,000
    Plant 17,000
  90,000   90,000

His position at the end of the year is:

 

Rs.

Cash in hand 7,000
Stock 8,600
Debtors 23,800
Furniture 15,000
Plant 20,350
Bills payable 20,200
Creditors 15,000

He withdrew Rs. 500 per month out of which to spent Rs. 1,500 for business purpose. Prepare the statement of profit or loss.


Solution:
Dr.  

Cr.

Liabilities

Jan 01, 2005

Dec 31, 2005

Assets

Jan 01, 2005

Dec 31, 2005

Sundry Creditors

35,000

15,000

Cash in hand

 5,000

 7,000

Bills Payable

15,000

20,200

Cash at bank

20,000

-

Capital

40,000

39,550

Sundry Debtors

18,000

23,800

     

Stock

22,000

  8,600

     

Furniture

  8,000

15,000

     

Plant

17,000

20,350

           

 

90,000

74,750

 

90,000

74,750

Statement of profit or loss for the period ended 31st December, 2005

Particulars

Amount (Rs)

Capital at the end of the year

39,550

Add: Drawings 6,000
  45,550
Less: Additional capital introduced 1,500
  44,050
Less: Capital at the beginning of the year 40,000
Profit 4,050

 

Question-17

Mr. Ashok does not keep his books properly. Following information is available from his books.

 

 

Jan. 01, 2005

Dec. 31, 2005

 

Rs.

Rs.

Sundry creditors

45,000

93,000

Loan from wife

66,000

57,000

Sundry debtors

22,500

 -

Land and Building

89,600

90,000

Cash in hand

7,500

8,700

Bank overdraft

25,000

 -

Furniture

1,300

1,300

Stock

34,000

25,000

During the year Mr. Ashok sold his private car for Rs. 50,000 and invested this amount into the business. He withdrew from the business Rs. 1,500 per month upto July 31, 2005 and thereafter Rs. 4,500 per month as drawings. You are required to prepare the statement of profit or loss and statement of affair as on December 31, 2005.

 

 


Solution:
Dr.  

Cr.

Liabilities

Jan 01, 2005

Dec 31, 2005

Assets

Jan 01, 2005

Dec 31, 2005

Sundry creditors

45,000

93,000

Sundry Debtors

22,500

-

Loan from wife

66,000

57,000

Land and building

89,600

90,000

Bank overdraft

25,000

 

Cash in hand

 7,500

   8,700

Capital (bal fig)

18,900

-

Furniture

 1,300

   1,300

     

Stock

34,000

 25,000

     

Capital (Bal fig)

-

 25,000

           

 

1,54,900

1,25,000

 

1,54,900

1,25,000

Statement of profit or loss for the period ended 31st December, 2005

Particulars

Amount (Rs)

Capital at the end of the year

-25,000

Add: Drawings 31,000
  6,000
Less: Additional capital introduced 50,000
  -44,000
Less: Capital at the beginning of the year 18,900
Loss 62,900

 

Question-18

Krishna Kulkarni has not kept proper books of accounts prepare the statement of profit or loss for the year ending December 31, 2005 from the following information:

 

 

Jan. 01, 2005

Dec. 31, 2005

 

(Rs.)

(Rs.)

Cash in hand

10,000

36,000

Debtors

20,000

80,000

Creditors

10,000

46,000

Bills receivable

20,000

24,000

Bills payable

4,000

42,000

Car

80,000

Stock

40,000

30,000

Furniture

8,000

48,000

Investment

40,000

50,000

Bank balance

1,00,000

90,000

The following adjustments were made:

(a) Krishna withdrew cash Rs. 5,000 per month for private use.

(b) Depreciation @ 5% on car and furniture @10% .

(c) Outstanding Rent Rs. 6,000.

(d) Fresh Capital introduced during the year Rs.30,000.


Solution:
Dr.  

Cr.

Liabilities

Jan 01, 2005

Dec 31, 2005

Assets

Jan 01, 2005

Dec 31, 2005

Creditors

10,000

46,000

Cash in hand

10,000

36,000

Bills Payable

  4,000

42,000

Debtors

20,000

80,000

O/S rent

 

  6,000

Bills receivable

20,000

24,000

Capital (bal fig)

2,24,000

3,35,200

Car(less depcn)

-

76,000

     

Stock

40,000

30,000

     

Furniture(less depcn)

  8,000

43,200

     

Investment

40,000

50,000

 

 

 

Bank balance

1,00,000

90,000

 

2,38,000

4,29,200

 

2,38,000

4,29,200

Statement of profit or loss for the period ended 31st December, 2005

Particulars

Amount (Rs)

Capital at the end of the year

3,35,200

Add: Drawings 60,000
  3,95,200
Less: Additional capital introduced 30,000
  3,64,200
Less: Capital at the beginning of the year 2,24,000
Profit 1,40,200

 

Question-19

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 December 31, 2005

 

 

Dec. 31, 2004

Dec. 31, 2005

 

Rs.

Rs.

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 Rs.10,000 p.m. for personal use, fresh capital introduce during the year Rs.2,00,000. A bad debts of Rs.2,000 and a provision of 5% is to be made on debtors. outstanding salary Rs.2,400, prepaid insurance Rs.700, depreciation charged on furniture and machine @ 10% p.a.


Solution:
Dr.  

Cr.

Liabilities

Jan 01, 2005

Dec 31, 2005

Assets

Jan 01, 2005

Dec 31, 2005

Bank overdraft

30,000

-

Cash in hand

6,000

24,000

Sundry Creditors

26,000

40,000

Stock

50,000

80,000

Bills Payable

 6,000

12,000

Sundry Debtors(less bad debts)

60,000

1,31,000

Outstanding salary

 

  2,400

Bills receivable

  8,000

28,000

Capital

1,82,000

4,33,300

Furniture (less depcn)

40,000

54,000

     

Machinery

50,000

90,000

     

Investment

30,000

80,000

 

 

 

Prepaid insurance

 

    700

 

2,44,000

4,87,700

 

2,44,000

4,87,700

Statement of profit or loss for the period ended 31st December, 2005

Particulars

Amount (Rs)

Capital at the end of the year

4,33,300

Add: Drawings 1,20,000
  5,53,300
Less: Additional capital introduced 2,00,000
  3,53,300
Less: Capital at the beginning of the year 1,82,000
Profit 1,71,300

 

Question-20

Ascertainment of Missing Figures

From the following information calculate the amount to be paid to creditors:

 

Rs.

Sundry creditors as on March 31, 2005

1,80,425

Discount received

26,000

Discount allowed

24,000

Return outwards

37,200

Return inward

32,200

Bills accepted

1,99,000

Bills endorsed to creditors

26,000

Creditors as on April 01, 2006

2,09,050

Total purchases

8,97,000

Cash purchases

1,40,000


Solution:
Dr.

Total Creditors Account

 Cr.

Date

Particulars

J.F

Amount

Date

Particulars

J.F

Amount

 

Discount received

 

  26,000

 

Bal b/d

 

1,80,425

 

Cash purchases

 

1,40,000

       
 

Bills endorsed

 

  26,000

       
 

Return outwards

 

  37,200

       
 

Balance c/d

 

2,09,050

       
 

Bills accepted

 

1,99,000

       

 

Question-21

Find out the credit purchases from the following:
 

 

Rs.

Balance of creditors April 01, 2004

45,000

Balance of creditors March 31, 2005

36,000

Cash paid to creditors

1,80,000

Cheque issued to creditors

60,000

Cash purchases

75,000

Discount received from creditors

5,400

Discount allowed

5,000

Bills payable given to creditors

12,750

Return outwards

7,500

Bills payable dishonoured

3,000

Bills receivable endorsed to creditors

4,500

Bills receivable endorsed to creditors dishonoured

1,800

Return inwards

3,700


Solution:
Dr.

Creditors Account

Cr.

Particulars

Amount (Rs)

Particulars

Amount (Rs)

Cash paid

1,80,000

Balance b/d

45,000

Discount received

    5,400

Bills Payable dishonoured

  3,000

Return outwards

    7,500

Endorsed Bills receivable dishonoured

  1,800

Bills receivable endorsed

   4,500

Credit Purchases (bal fig)

2,56,350

Bills payable given to creditors

12,750

   

Cheque paid to creditors

60,000

   

Balance c/d

36,000

   
 

3,06,150

 

3,06,150

 

Question-22

From the following information calculate total purchases.
 

 

Rs.

Creditors Jan. 01, 2005

30,000

Creditors Dec. 31, 2005

20,000

Opening balance of Bills payable

25,000

Closing balance of Bills payable 35,000
Cash paid to creditors 1,51,000
Bills discharged 44,500
Cash purchases 1,29,000
Return outwards 6,000

Solution:
Dr.

Creditors Account

Cr.

Particulars

Amount (Rs)

Particulars

Amount (Rs)

Cash paid to creditors

1,51,000

Balance b/d

  30,000

Return outwards

    6,000

Opening bal of Bills Payable

  25,000

Closing balance of Bills Payable

  35,000

Purchases (bal fig)

3,30,500

Cash purchases

1,29,000

   

Bills discharged

44,500

   

Balance c/d

20,000

   
       
 

3,85,500

 

3,85,500

 

Question-23

The following information is given:
 

 

Rs.

Opening creditors

60,000

Cash paid to creditors

30,000

Closing creditors

36,000

Returns Inward

13,000

Bill matured

27,000

Bill dishonoured

8,000

Purchases return

12,000

Discount allowed

5,000

Calculate credit purchases during the year.


Solution:
Dr. Creditors Account

Cr.

Particulars

Amount (Rs)

Particulars

Amount (Rs)

Cash paid to creditors

30,000

Balance b/d

60,000

Purchase return

12,000

Bill dishonoured

8,000

Bills matured

27,000

Credit Purchases (bal fig)

37,000

Balance c/d

36,000

   
       
       
       
 

1,05,000

 

1,05,000

 

Question-24

From the following, calculate the amount of bills accepted during the year.
 

 

Rs.

Bills payable as on April 01, 2005

1,80,000

Bills payable as on March 31, 2006

2,20,000

Bills payable dishonoured during the year

28,000

Bills payable honoured during the year

50,000


Solution:
Dr. Bills Payable Account

Cr.

Particulars

Amount(Rs)

Particulars

Amount (Rs)

Bills Payable dishonoured during the year

   28,000

Balance b/d

1,80,000

Balance c/d

2,20,000

Bills Payable honoured during the year

  50,000

   

Bills accepted (bal fig)

  18,000

       
 

2,48,000

 

2,48,000

Question-25

Find out the amount of bills matured during the year on the basis of information given below:
 

 

Rs.

Bills payable dishonoured

37,000

Closing balance of Bills payable

85,000

Opening balance of Bills payable

70,000

Bills payable accepted

90,000

Cheque dishonoured

23,000


Solution:
Dr. Bills Matured Account

 Cr.

Particulars

Amount(Rs)

Particulars

Amount (Rs)

Bills payable dishonoured

37,000

Balance b/d

70,000

Balance c/d

85,000

Bills Payable accepted

90,000

Bills matured (bal fig)

38,000

 

 

       
 

1,60,000

 

1,60,000

 

Question-26

Prepare the bills payable account from the following and find out missing figure if any:

 

 

Rs.

Bills accepted

1,05,000

Discount received

17,000

Purchases returns

9,000

Return inwards

12,000

Cash paid to accounts payable

50,000

Bills receivable endorsed to creditor

45,000

Bills dishonoured

17,000

Bad debts

14,000

Balance of accounts payable (closing)

85,000

Credit purchases

2,15,000

 

 


Solution:
Dr. Bills Payable Account

 Cr.

Particulars

Amount (Rs)

Particulars

Amount (Rs)

Discount received

17,000

Sundry creditors 1,05,000

Purchase returns

  9,000

Bills dishonoured    17,000

Cash paid

50,000

Credit Purchases 2,15,000

Bills receivable endorsed

45,000

   

Closing balance

85,000

   
Balance c/d 1,31,000    
  3,37,000  

3,37,000

 

Question-27

Calculate the amount of bills receivable during the year.
 

 

Rs.

Opening balance of bills receivable

75,000

Bill dishonoured

25,000

Bills collected (honoured)

1,30,000

Bills receivable endorsed to creditors

15,000

Closing balance of bills receivable

65,000


Solution:
Dr. Bills Receivable Account

 Cr.

Particulars

Amount(Rs)

Particulars

Amount (Rs)

Balance b/d

   75,000

Bills dishonoured

  25,000

Bills receivable during the year (bal fig)

1,60,000

Bills endorsed to creditors

  15,000

   

Bills collected

1,30,000

   

Balance c/d

   65,000

 

2,35,000

 

2,35,000

 

Question-28

Calculate the amount of bills receivable dishonoured from the following information.
 

 

Rs.

Opening balance of bills receivable

1,20,000

Bills collected (honoured)

1,85,000

Bills receivable endorsed

22,800

Closing balance of bills receivable

50,700

Bills receivable received

1,50,000


Solution:
Dr. Bills Receivable Account  Cr.

Particulars

Amount(Rs)

Particulars

Amount (Rs)

Balance b/d

1,20,000

Bills collected

1,85,000

B/R received

1,50,000

B/R endorsed

  22,800

   

Balance c/d

  50,700

   

Bills dishonoured (bal fig)

  11,500

 

2,70,000

 

2,70,000

 

Question-29

From the details given below, find out the credit sales and total sales.
 

 

Rs.

Opening debtors

45,000

Closing debtors

56,000

Discount allowed

2,500

Sales returns

8,500

Irrecoverable amount

4,000

Bills receivables received

12,000

Bills receivable dishonoured

3,000

Cheque dishonoured

7,700

Cash sales

80,000

Cash received from debtors

2,30,000

Cheque received from debtors

25,000


Solution:
Dr. Debtors Account

 Cr.

Particulars

Amount(Rs)

Particulars

Amount (Rs)

Balance b/d

  45,000

Discount allowed

    2,500

B/R dishonoured

   3,000

Irrecoverable amount

   4,000

Cheque dishonoured

    7,700

B/R received

  12,000

Credit sales (bal fig)

2,82,300

Cash

2,30,000

   

Cheque received from debtors

   25,000

   

Sales return

   8,500

   

Balance c/d

56,000

 

3,38,000

 

3,38,000

Credit Sales = Rs. 2,82,300

Cash Sales = Rs. 80,000

Total Sales = Rs. 3,62,300

 

Question-30

From the following information, prepare the bills receivable account and total debtors account for the year ended December 31, 2005.
 

 

Rs.

Opening balance of debtors

1,80,000

Opening balance of bills receivable

55,000

Cash sales made during the year

95,000

Credit sales made during the year

14,50,000

Return inwards

78,000

Cash received from debtors

10,25,000

Discount allowed to debtors

55,000

Bills receivable endorsed to creditors

60,000

Cash received (bills matured)

80,500

Irrecoverable amount

10,000

Closing balance of bills receivable on Dec. 31, 2005

75,500


Solution:
Dr. Bills receivable Account

 Cr.

Particulars

Amount(Rs)

Particulars

Amount (Rs)

Balance b/d

   55,000

B/R endorsed

60,000

Bills received (bal fig)

1,61,000

Cash received

80,500

   

Balance c/d

75,500

       
 

2,16,000

 

2,16,000

 

Dr. Debtors Account

 Cr.

Particulars

Amount(Rs)

Particulars

Amount (Rs)

Balance b/d

  1,80,000

Cash received

10,25,000

Credit sales

14,50,000

Discount allowed

    55,000

   

Irrecoverable amount

    10,000

   

Bills receivable

1,61,000

   

Return inwards

   78,000

   

Balance c/d (bal fig)

3,01,000

       
 

16,30,000

 

16,30,000

 





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