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Question

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.

ItemsJan 1, 2005 (Rs.)Dec 31, 2005 (Rs.)Cash in hand6,00024,000Bank Overdraft30,000 Stock50,00080,000Sundry Creditors26,00040,000Sundry Debitors60,0001,40,000Bills Payable6,00012,000Furniture40,00060,000Bills Receivable8,00028,000Machinery50,0001,00,000Investment30,00080,000

Drawing Rs. 10,000 p.m. for personal use, fresh capital introduced during the year Rs. 2,00,000. Outstanding salary Rs. 2,400, prepaid insurance Rs. 700, depreciation charged on furniture and machinery @ 10% pa.

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Solution

Statement of Affairs

as on 1st January, 2005

Capital and LiabilitiesAmt. (Rs.)AssetsAmt. (Rs.)Bank Overdraft 30,000Cash in Hand 6,000Sundry Creditors 26,000Stock 50,000Bills Payable 6,000Sundry Debtors 60,000Capital (Balancing Figure)1,82,000Furniture40,000Bills Receivables 8,000Machinery 50,000Investment 30,000 ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 2,44,000–––––––––––––––– ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯2,44,000––––––––––––––––

Statement of Affairs

as on 31st December, 2005

Capital and LiabilitiesAmt. (Rs.)AssetsAmt. (Rs.)Sundry Creditors40,000Cash in Hand 24,000Bills Payable12,000Stock 80,000Outstanding Salary2,400Debtors 1,40,000Capital (Balancing Figure)4,33,400() Bad debts 2,000 ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯1,38,000() Provision @ 5% 6,9001,31,100Furniture ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 60,000() Depreciation 6,000–––– 54,000Bills Receivables 28,000Machinery 1,00,000() Depreciation @ 10% 10,000 –––––– 90,000Investment 80,000Prepaid Insurance 700¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯4,87,800––––––––––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯4,87,800––––––––––––––––

Statement Showing Profit or Loss for the Year 2005

ParticularsAmt(Rs.)Capital at the end of the year as on 31st December 20054,33,400(+) Drawings during the year (10,000×12) 1,20,000 ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 5,53,400 () Fresh capital introduced during the year (2,00,000)¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 3,53,400 () Capital at the beginning of the year on 1st Jan 2005 (1,82,000)Loss during the year 2005¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 1,71,400 ––––––––––––––––––––––


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