PRACTICAL PROBLEMS
Sun and Moon are partners in a firm sharing profit and losses in the ratio of 3:2. They kept their books under single entry system. On 1st April 2010 the following statement of affairs was extracted from their Books.
Statement of Affairs |
|||
as on 1st April 2010 |
|||
Liabilities |
Amount Rs |
Assets |
Amount Rs |
Capitals: |
|
Plant and Machinery |
15,000 |
Sun |
12,500 |
Stock |
10,000 |
Moon |
10,000 |
Debtors |
17,500 |
Creditors |
15,000 |
Cash in Hand |
7,500 |
Bills Payable |
12,500 |
|
|
|
50,000 |
|
50,000 |
|
|
|
|
On 31st March 2011 theirs assets and liabilities were as follows. Plant and Machinery Rs 44,000 stock Rs 32,000 cash in hand Rs 12,000 creditors Rs 8,000 Debtors Rs 20,000 Bills payable Rs 15,000 Drawings during the year Sun Rs 5,000 and Moon Rs 3,000.
Prepare: Closing statement of affairs and statement of profit or Loss for the year ended 31st March 2011 after considering the following adjustments.
1) Plant is found overvalued by 10% and stock is found undervalued by 20%.
2) R.D.D. is to be created at 10% on Debtors.
3) Interest on Capital is to be allowed at 10% p.a. and 10% p.a. on Drawings
Statement of Affairs
as on March 31,2011
|
|||
Liabilities
|
Amount
(Rs)
|
Assets
|
Amount
(Rs)
|
Bills Payable
|
15,000
|
Cash in Hand
|
12,000
|
Creditors
|
8,000
|
Stock
|
32,000
|
Capital (Balancing Figure)
|
85,000
|
Plant and Machinery
|
44,000
|
|
|
Debtors
|
20,000
|
|
1,08,000
|
|
1,08,000
|
|
|
|
|
Statement of Profit or Loss
for the year ended March 31,2011
|
||
Particulars
|
Amount
(Rs)
|
Amount
(Rs)
|
Capital at the end of the year
|
|
85,000
|
Add: Drawings made during the year
|
|
|
Sun
|
5,000
|
|
Moon
|
3,000
|
8,000
|
Adjusted capital at the end of the year
|
|
93,000
|
Less: Capital in the beginning of the year
|
|
|
Sun
|
(12,500)
|
|
Moon
|
(10,000)
|
(22,500)
|
|
|
70,500
|
Add: Interest on Drawings
|
|
|
Sun
|
250
|
|
Moon
|
150
|
400
|
Stock (32,000 × 20%)
|
|
6,400
|
Less: Reserve for Doubtful Debts (20,000 × 10%)
|
|
(2,000)
|
Interest on Capital
|
|
|
Sun
|
(1,250)
|
|
Moon
|
(1,000)
|
(2,250)
|
Plant (44,000 × 10%)
|
|
(4,400)
|
Profit or Loss for the year
|
|
68,650
|
|
|
|