Question

Roshan, whose accounts are maintained by Single Entry System, acquired a retail business on 1st April, 2018. He had ₹ 40,000 of his own and he borrowed ₹ 20,000 from his wife. He paid ₹ 15,000 for Goodwill, ₹ 5,000 for Furniture and ₹ 35,000 for Stock.
Total cash received by him during the financial year from the Debtors was ₹ 2,30,000. His payments were:

	₹
Purchases	1,56,000
Salary and Wages	21,400
Trade Expenses	7,200

Rent:

For business premises	5,920
For private house	2,960
Payments made for domestic purposes and drawings	26,400

At the end of the year, the Stock was ₹ 37,500. He owed ₹ 13,500 to Creditors for goods and his customers owed to him ₹ 15,000. Provide 5% for Depreciation on Furniture, Interest at 5% on wife's Loan and ₹ 1,000 for Doubtful Debts.
Prepare the Cash Account, the Profit and Loss Account for the year ended 31st March, 2019 and the Balance Sheet at the close of the year.

Answer 1

Trading Account for the year ended 31st March, 2019
Dr.						Cr.
Particulars			Amount (₹)	Particulars	Amount (₹)
Opening Stock			35,000	Sales	2,45,000
Purchases: Cash		1,56,000		Closing Stock	37,500
Credit		13,500	1,69,500
Gross Profit c/d			78,000
			2,82,500		2,82,500

Profit and Loss Account for the year ended March 31, 2019
Dr.					Cr.
Particulars		Amount (₹)	Particulars	Amount (₹)
Salary and Wages		21,400	Gross Profit b/d	78,000
Trade Expenses		7,200
Rent for Business Premises		5,920
Provision for Doubtful Debts		1,000
Depreciation on Furniture		250
Interest on wife’s loan		1,000
Net Profit t/d to Capital		41,230
		78,000		78,000

Balance Sheet as on March 31, 2019
Liabilities			Amount (₹)	Assets		Amount (₹)
Creditors			13,500	Cash Balance		15,120
Wife’s Loan from Wife		20,000		Stock		37,500
Add: O/s Interest		1,000	21,000	Furniture	5,000
Capital		40,000		Less: Depreciation	250	4,750
Less: Drawings		29,360		Debtors	15,000
10,640				Less: Provision for Doubtful Debts	1,000	14,000
Add: Net Profit	41,230		51,870	Goodwill		15,000
			86,370			86,370

Cash Account
Liabilities	Amount (₹)	Assets	Amount (₹)
Capital	40,000	Goodwill	15,000
Wife’s Loan	20,000	Furniture	5,000
Debtors	2,30,000	Stock	35,000
		Purchases	1,56,000
		Salary and Wages	21,400
		Trade Expenses	7,200
		Rent for Business Premises	5,920
		Drawings( 2,960+26,400)	29,360
		Balance c/d	15,120
	2,90,000		2,90,000

Working Notes

Dr.	Creditors Account				Cr.
Particulars		Amount (₹)	Particulars	Amount (₹)
Balance c/d		13,500	Purchases-Credit (B/F)	13,500
		13,500		13,500

Dr.	Debtors Account				Cr.
Particulars		Amount (₹)	Particulars	Amount (₹)
Sales A/c (B/F)		2,45,000	Cash	2,30,000
			Balance c/d	15,000
		2,45,000		2,45,000