Question

From the following records kept on single entry basis, prepare final accounts assuming that ratio of gross profit to sales is 25%:

	1-1-2018	31-12-2018
	₹	₹
Cash at Bank	1,400	1,800
Debtors	?	2,400
Stock	?	1,700
Fixed Assets	10,000	10,000
Creditors	1,600	?
Loan	1,000	800

Transactions during the year 2018:

	₹
Collections from debtors	9,300
Cash Sales	1,000
Credit Sales	9,000
Payment to Creditors	6,100
Cash Purchase	1,600
Credit Purchase	6,400
Drawings	1,000
Business Expenses	1,000
Discount Received	200
Discount Allowed	100

Answer 1

Trading Account for the year ended December 31, 2018
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Opening Stock	1,200	Sales (Cash + Credit)	10,000
Purchases (Cash + Credit)	8,000	Closing Stock	1,700
Gross Profit	2,500
	11,700		11,700

Profit & Loss Account for the year ended December 31, 2018
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Business Expenses	1,000	Gross Profit	2,500
Discount Allowed	100	Discount Received	200
Net Profit	1,600
	2,700		2,700

Balance Sheet as on December 31, 2018
Dr.				Cr.
Liabilities		Amount (₹)	Assets	Amount (₹)
Capital	12,800		Cash at Bank	1,800
Less: Drawings	1,000		Debtors	2,400
Add: Net Profit	1,600	13,400	Stock	1,700
Closing Creditors		1,700	Fixed Assets	10,000
Loan		800
		15,900		15,900

Working Notes:

Balance Sheet as on January 01, 2018
Dr.			Cr.
Liabilities	Amount (₹)	Assets	Amount (₹)
Creditors	1,600	Cash at Bank	1,400
Loan	1,000	Debtors	2,800
Capital (Balancing figure)	12,800	Stock	1,200
		Fixed Assets	10,000
	15,400		15,400

Debtors Account
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Balance b/d	2,800	Cash A/c	9,300
Sales A/c	9,000	Discount Allowed A/c	100
		Balance c/d	2,400
	11,800		11,800

Creditors Account
Dr.			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Cash A/c	6,100	Balance b/d	1,600
Discount Received A/c	200	Purchases A/c	6,400
Balance c/d	1,700
	8,000		8,000

Rate of Gross Profit (on sales) = 25%

Gross Profit = 25% of (1,000 + 9,000) = 2,500

Gross Profit = Net Sales – Cost of Goods Sold

2,500 = 10,000 – Cost of Goods Sold

Cost of Goods Sold = 10,000 – 2,500 = ₹ 7,500

Cost of Goods Sold = Opening Stock + Purchases + Direct Expenses – Closing Stock

7,500 = Opening Stock + (1,600 +6,400) + 0 – 1,700

Opening Stock = 7,500 – 8,000 + 1,700 = ₹ 1,200