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 1^st April 2010 the following statement of affairs was extracted from their Books.

Statement of Affairs

as on 1^st 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 31^st 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 31^st 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

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Solution

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

Note: There is a mismatch in the Net Profit as given in the textbook (which is Rs 70,650) and that of as per the above solution (which is Rs 68,650).

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Similar questions

PRACTICAL PROBLEMS

A and B are in Partnership. Their Capitals on 1^st April 2010 were Rs 30,000 each. The assets and liabilities as on 31^st March 2011 were as follows. Cash in hand Rs 2,400, Cash at Bank Rs 16,000 Bill Receivable Rs 4,000, Debtors Rs 28,600 Stock Rs 26,000. Machinery Rs 14,000, furniture Rs 8,000, Bills Payable Rs 3,000 Sundry creditors Rs 6,000 Outstanding salary Rs 800.

Additional Information:

1) Provide Rs 600 as Bad Debts and 5% R.D.D.

2) Depreciate furniture @ 5% p.a. and Machinery @ 10% p.a.

3) Stock is found undervalued by Rs 2,000.

4) Sundry creditors are found overvalued by Rs 1,000.

5) Prepaid Insurance Rs 2,000.

6) Additional capital introduced by partners Rs 4,000 each.

7) Drawings of ‘A’ Rs 3,000 and ‘B’ Rs 2,000 calculate the profit for the year ended 31^st March 2011.

PRACTICAL PROBLEMS

Asha and Usha were partners sharing profits and losses in the ratio of 2:1. Prepare their statement Profit or Loss for the year ended 31^st March, 2012 from the following statement of Affairs as on 31^st March, 2011.

Liabilities	Amount Rs	Assets	Amount Rs
Creditors	33,000	Cash at Bank	6,000
Bills Payable	9,000	Cash in Hand	2,000
Capitals:	62,000	Building	41,000
Asha	32,000	Machinery	21,000
Usha		Furniture	10,000
		Stock	18,000
		Debtors	25,000
		Bills Receivable	13,000
	1,36,000		1,36,000

The assets and liabilities as on 31^st March 2012 were:

Sundry creditors Rs 35,000 Bill Receivable Rs 18,000 Bills payable Rs 15,000 cash in hand Rs 3,000, Stock Rs 32,000 Cash of bank Rs 6,000 Debtors Rs 38,000. There were no changes in fixed assets.

Further Information:

1) Asha and Usha had drawn Rs 10,000 and Rs 8,000 respectively for personal use.

2) They also brought additional capital of Rs 6,000 and Rs 4,000 respectively.

3) Building to be depreciated by 5% and machinery and furniture at 10%.

4) Charge interest at 10% p.a. on opening capitals and allow interest on drawings of Asha and Usha were Rs 700 and Rs 500 respectively.

Q. PRACTICAL PROBLEMS

Mahendra Keeps his books by Single Entry System. His position on 1^st April 2012, was as follows : Cash in Hand Rs 7,900, Cash at Bank Rs 20,000, Debtors Rs 18,000. Stock Rs 29,000, Motor Car Rs 5,000, Bank Loan Rs 18,000 and Outstanding Expenses Rs 2,700.
On 1^st October, 2012 Mahendra introduced Rs 10,000 as further capital in the business and withdrew on the same date Rs 7,000 out of which he spent Rs 5,000 on the purchase of a Machinery for the business.
On 31^st March 2013 his position was as follows: Cash in Hand Rs 7,600, Cash at Bank Rs 22,000, Stock Rs 30,000 Debtors Rs 25,700, Furniture Rs 6,000, Creditors Rs 25,200, and prepaid expenses Rs 200.
Prepare a Statement showing the Profit or Loss made by him during the year ended 31^st March, 2013 and Opening and Closing Statement of affairs. Considered the following adjustments also.
1) Depreciate Motor Car and Furniture @ 10% p.a. Furniture was purchased on 1^st Oct., 2012.
2) Provide Rs 1,200 for Bad debts and provide 5% R.D.D.
3) Goods taken for personal use by Mahendra amounting to Rs 1,500
4) Provide interest on capital @ 10% p.a.

Ajay started business with a capital of Rs 2,25,000 on 1st April, 2011.During the year, he withdrew Rs 40,000 for his personal use and introduced Rs 7,000 as fresh capital. On 31st March 2012,his position of assets and liabilities stood as follows:

Cash in hand 18,500 Rs

Stock 20,000 Rs

Bills receivable 25,000 Rs

Debtors 4,00,000 Rs

Creditors 1,50,000 Rs

Bills Payable 3,000 Rs

You are required to prepare Statement of Profit or Loss for the year ended 31st March, 2012.

Q. On 1st April, 2017, A and B entered into partnership contributing Rs. 60,000 and Rs. 45,000 respectively. They agreed to share profits and losses in the ratio of 3 : 2. B is allowed salary of Rs. 12,000 per year. Interest on capital is to be allowed @ 10% p.a. During the year, A withdrew Rs. 9,000 and B withdrew Rs. 18,000 as drawings. Interest on drawings paid by A and B were Rs. 150 and Rs. 210 respectively. Profit for the year ended 31st March, 2018 before the above adjustments was Rs. 35,000. Show distribution of profits by preparing Profit and Loss Appropriation Account of the firm. Prepare Partners' Capital Accounts also.

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Statement of Affairs
as on 1^st 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

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