Question

Mrs. Bhavana keeps his books by Single Entry System. You're required to prepare final accounts of her business for the year ended December 31, 2005. Her records relating to cash receipts and cash payments for the above period showed the following particulars

Summary of cash

$\begin{array}{cccc}\text{Receipts}& \text{Amt. (Rs.)}& \text{Payments}& \text{Amt. (Rs.)}\\ \text{Opening balance of cash}& 12,000& \text{Paid to creditors}& 53,000\\ \text{Further capital}& 20,000& \text{Business expenses}& 12,000\\ \text{Received from debtors}& 1,20,000& \text{Wages paid}& 30,000\\ & & \text{Bhavana's drawings}& 15,000\\ & & \text{Balance at bank on}& \\ & & \text{Dec 31 2005}& 35,000\\ & & \text{Cash in hand}& 7,000\\ & \underset{–}{\overline{1,52,000}}& & \underset{–}{\overline{1,52,000}}\end{array}$

The following information is aslo available

$\begin{array}{ccc}\text{Items}& \text{Jan 1, 2005 (Rs.)}& \text{Dec 31, 2005 (Rs.)}\\ \text{Debtors}& 55,000& 85,000\\ \text{Creditors}& 22,000& 29,000\\ \text{Stock}& 35,000& 70,000\\ \text{Plant}& 1,00,000& 1,00,000\\ \text{Machinery}& 50,000& 50,000\\ \text{Land and Building}& 2,50,000& 2,50,000\\ \text{Investment}& 20,000& 20,000\end{array}$

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%.

Answer 1

In the above question three things are missing i.e., Total sales (credit), Total purchase and Capital employed.
Hence, first of all we have get these figure than only financial statements will be prepared.

$\text{Dr.}\text{Debtor's Account}Cr.\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{J.F.}& \text{Amt. (Rs.)}& \text{Date}& \text{Particulars}& \text{J.F.}& \text{Amt. (Rs.)}\\ 2005& & & & 2005& & & \\ \text{Jan 1}& \text{Balance b/d}& & 55,000& & \text{Cash A/c}& & 1,20,000\\ & \text{Sales A/c (Credit)}& & & \text{Dec 31}& \text{Balance b/d}& & 85,000\\ & \text{(Balancing Figure)}& & 1,50,000& & & & \\ & & & \underset{–}{\overline{2,05,000}}& & & & \underset{–}{\overline{2,05,000}}\end{array}$

$\text{Dr.}\text{Creditor's Account}Cr.\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{J.F.}& \text{Amt. (Rs.)}& \text{Date}& \text{Particulars}& \text{J.F.}& \text{Amt. (Rs.)}\\ 2005& & & & 2005& & & \\ & \text{Cash A/c}& & 53,000& \text{Jan 1}& \text{Balance b/d}& & 22,000\\ & & & & & \text{Purchases A/c}& & \\ \text{Dec 31}& \text{Balance c/d}& & 29,000& & \text{(credit)}& & 60,000\\ & & & & & \text{(Balancing Figure)}& & \\ & & & \underset{–}{\underset{–}{\overline{82,000}}}& & & & \underset{–}{\underset{–}{\overline{82,000}}}\end{array}$

Statements of Affairs

as on 31st December, 2005

$\begin{array}{cccc}\text{Capital and Liabilities}& \text{Amt. (Rs.)}& \text{Assets}& \text{Amt. (Rs.)}\\ \text{Creditors A/c}& 22,000& \text{Debtors A/c}& 55,000\\ \text{Capital at the beginning}& 5,00,000& \text{Stock}& 35,000\\ \text{(Balancing Figure)}& & \text{Plant}& 1,00,000\\ & & \text{Machinery}& 50,000\\ & & \text{Land and Building}& 2,50,000\\ & & \text{Investment}& 20,000\\ & & \text{Cash}& 12,000\\ & \underset{–}{\underset{–}{\overline{5,22,000}}}& & \underset{–}{\underset{–}{\overline{5,22,000}}}\end{array}$

Trading and Profit and Loss Account

as on 31st December, 2005

$\begin{array}{cccc}\text{Particulars}& \text{Amt. (Rs.)}& \text{Particulars}& \text{Amt. (Rs)}\\ \text{Opening Stock}& 35,000& \text{Sales}& 1,50,000\\ \text{Purchase}& 60,000& \text{Closing Stock}& 70,000\\ \text{Wages}& 30,000& & \\ \text{Gross Profit c/d}& 95,000& & \\ \text{(Balancing Figure)}& & & \\ & \underset{–}{\underset{–}{\overline{2,20,000}}}& & \underset{–}{\underset{–}{\overline{2,20,000}}}\\ \text{Business Expenses}& 12,000& \text{Gross Profit b/d}& 95,000\\ \text{Provision for Doubtful Debts}& 4,250& & \\ & & & \\ \text{Depreciation:}& & & \\ \text{On Plant}10,000& & & \\ \text{On Building}25,000& & & \\ \text{On Machinery}\underset{–}{2,500}& 37,500& & \\ \text{Net Profit}& 41,250& & \\ \text{(Balancing Figure)}& & & \\ & \underset{–}{\underset{–}{\overline{95,000}}}& & \underset{–}{\underset{–}{\overline{95,000}}}\end{array}$

Balance Sheet

as on 31st December, 2005

$\begin{array}{cccc}\text{Capital and Liabilities}& \text{Amt. (Rs.)}& \text{Assets}& \text{Amt. (Rs.)}\\ \text{Capital}5,00,000& & \text{Cash in Hand}& 7,000\\ (+)\text{Net Profit}41,250& & \text{Cash at Bank}& 35,000\\ \overline{5,41,250}& & \text{Investment}& 20,000\\ (+)\text{Further}& & \text{Debtors}85,000& \\ \text{Capital}20,000& & (-)\text{Provision @ 5\%}\underset{–}{4,250}& 80,750\\ \overline{5,61,250}& & & \\ (-)\text{Drawings}\underset{–}{15,000}& 5,46,250& \text{Plant}1,00,000& \\ & & (-)\text{Depreciation @}& \\ \text{Creditors}& 29,000& 10\%\underset{–}{10,000}& 90,000\\ & & \text{Machinery}50,000& \\ & & (-)\text{Depreciation}& \\ & & @5\%\underset{–}{2,500}& 47,500\\ & & \text{Land and Building}2,50,000& \\ & & (-)\text{Depreciation}& \\ & & @10\%\underset{–}{25,000}& 2,25,000\\ & & \text{Stock (Closing)}& 70,000\\ & \underset{–}{\underset{–}{\overline{5,75,250}}}& & \underset{–}{\underset{–}{\overline{5,75,250}}}\end{array}$