Detailed, Step-by-Step NCERT Solutions for 11 Accountancy Chapter 11 Accounts from Incomplete Records Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.
Accounts from Incomplete Records NCERT Solutions for Class 11 Accountancy Chapter 11
Accounts from Incomplete Records Questions and Answers Class 11 Accountancy Chapter 11
Test Your Understanding – I
Tick the correct answer :
Question 1.
Incomplete record mechanism of book keeping is :
(a) Scientific
(b) Unscientific
(c) Unsystematic
(d) Both (b) and (c)
Answer:
(b) Unscientific
Question 2.
Opening capital is ascertained by preparing :
(a) Total debtor’s account
(b) Total creditor’s account
(c) Cash account
(d) Opening statement of affairs
Answer:
(d) Opening statement of affairs
Question 3.
Credit purchase, during the year is ascertained by preparing :
(a) Total creditor’s account
(b) Total debtor’s account
(c) Cash account
(d) Opening statement of affairs
Answer:
(a) Total creditor’s account
Question 4.
If Opening capital is Rs. 60,000, drawings Rs. 5,000, capital introduced during the period Rs. 10,000, closing capital Rs. 90,000. The value of profit earned during the period will be:
(a) Rs. 20,000
(b) Rs. 25,000
(c) Rs. 30,000
(d) Rs. 40,000
Answer:
(b) Rs. 25,000
Test Your Understanding – II
Write the correct word(s) :
1. Credit sales can be ascertained as the balancing figure in the ………….. account.
2. Excess of over ………….. represents loss sustained during the period.
3. To ascertain the profit, closing capital is to be adjusted by deducting …………..and adding
4. Incomplete records are generally used by …………..
Answer:
1. total debtor’s
2. opening capital, closing capital
3. additional capital introduced, drawings during the year
4. small traders.
Short Answer Type Questions
Question 1.
State the meaning of incomplete records.
Answer:
Meaning of Incomplete Records – Accounting records which are not prepared in accordance with the principle of double entry are known as ‘Incomplete Records’. In other words, any accounting records which fall short of complete double entry are called incomplete records. Sometimes, it is also termed as ‘Single Entry System’.
But it is not correct to describe this system as ‘Single Entry System’ because in Single Entry System only the personal aspects of a transaction is recorded and the real and nominal aspects are left entirely unrecorded,
whereas “incomplete records refer to maintaining of only those records which are essential. In other words, under the incomplete records some of the subsidiary books and some ledger accounts are not maintained which otherwise are essential under the double entry system.’
“Single Entry System is a method or a variety of methods, employed for the recording of transaction, which ignore the two fold aspects and consequently fails to provide the businessman with the information necessary for him to be able to ascertain the position.” – Carter
“A system of book-keeping in which, as a rule only records of cash and of personal accounts are maintained, it is always incomplete double entry system, varying with circumstances.” – Kohler
In nutshell, it is a method or a variety of methods employed for the recording of transactions, which ignore the two-fold aspect and consequently fails to provide the businessman with the information necessary for him to be able to ascertain the position. It is a system which is developed by certain business houses who for their convenience and more practical approach, reject the rules of the double entry system and maintaine only the bare essential records.
Generally, business transactions are recorded on the basis of double entry system are not followed for recording business transactions. When double entry’ system is not followed for maintaining records, these records are termed as incomplete records. Many authors describe it as Single Entry System.
However, Singe Entry System is a misnomer because there is no such system of maintaining accounting records. It is rather a mechanism of maintaining records in which rules of double entry system are not followed completely. There is partial observance of rules of double entry system in this system.
In this recording is done according to convenience and needs of business entities and there is no uniformity in maintenance of records by different entities. This system differ from concern to concern. In this, only records of cash and of personal accounts are maintained. It is always incomplete double entry system, varying with circumstances,
Question 2.
What are the possible reasons for keeping incomplete records?
Answer:
The possible reasons for keeping incomplete records are following:
(1) The businessman may be ignorant of the seperate legal entity.
(2) The businessman may be ignorant of the double entry accounting principle.
(3) The businessman may not intentionally maintain proper accounts to evade taxation.
(4) Destruction of the books of accounts due to fire, flood, etc.
Question 3.
Distinguish between statement of affairs and balance sheet.
Answer:
Difference between Statement of Affairs and Balance Sheet:
Question 4.
What practical difficulties ate encountered by a trader due to incompleteness of accounting records?
Answer:
The following practical difficulties are encountered by a trader due to incompleteness of accounting records :
(1) Unscientific – Absence of systematic recording of both aspects of a transaction under this, makes it unscientific.
(2) No trial balance or arithmetical accuracy of accounts cannot be checked – Dual aspects of a transaction is not recorded under this system. As a result, trial balance cannot be prepared from the accounting records maintained. Hence, arithmetical accuracy of accounting records cannot be checked.
(3) True profits cannot be known – Nominal accounts are not maintained and therefore it is not possible to prepare trading account and Profit & Loss Account to calculate gross profit and net profit respectively. Although the amount of net profit is determinable but the absence of details of revenue, other income, expenses and losses affect sound decision making.
(4) True financial position cannot be determined – As all the assets and liabilities and depreciation are not recorded, Balance Sheet cannot be prepared and thus the true financial position cannot be ascertained.
(5) Difficult to make planning and decision making – In the absence of reliable information about nominal and real accounts, effective planning and control over expenses, assets etc. are not possible.
(6) Not recognized by tax authorities – Accounts maintained based on this system are not accepted by sale-tax and income-tax authorities.
(7) Interfirm comparison not possible – Because of variation in accounting procedure and rules, comparison of two or more business is not possible.
Long Answer Type Questions
Question 1.
What is meant by a ‘Statement of Affairs’? How can the profit or loss of a trader be ascertained with the help of a statement of affairs?
Answer:
Statement of affairs – A statement of affairs is a statement of assets and liabilities of a business as on a particular date. Under this method profit is ascertained by comparing the capital at the beginning and capital at the end of the accounting period and necessary adjustments are made for drawings, fresh additional capital, drawings and interest on capital. The following steps are followed to ascertained the profit or loss :
(1) Prepare a Statement of Affairs at the beginning (if not given) of the accounting period to ascertain the Opening Capital.
(2) Ascertain drawings and capital introduced during the year.
(3) Prepare a Statement of Affairs at the end of the accounting period to ascertain the Closing Capital (capital at the end) or prepare statement for ascertaining the closing capital before making certain adjustments.
Format of Statement of Affairs Statement of Affairs of as on
(4) Prepare a Statement of Profit with the help of the following formula:
Net Profit = Capital at the end
Add: Drawings
Less : Additional Capital introduced
Less: Opening Capital
Statement of profit is usually prepared as follows :
If it is desired to calculate profit before certain adjustments separately the Statement of Profit should be prepared as follows :
(5) Prepare Balance Sheet/Received or Final Statements of Affairs at the end after adjusting depreciation, provision for bad and doubtful debts etc.
Question 2.
“Is it possisble to prepare the profit and loss account and the balance sheet from the incomplete books of accounts kept by a trader? Do you agree? Explain.
Answer:
Yes, it is possible to prepare the Profit & Loss Account and the Balance Sheet from the incomplete books of accounts kept by a trader by “conversion method” and calculating missing figure and preparing final accounts.
While converting incomplete accounts into double entry, the following procedure should be adopted :
(1) Opening Statement of Affairs – A statement of affairs as at the beginning of the year should be prepared to find out capital in the beginning.
(2) Cash Book – For this purpose, first of all, a summary of all the cash transactions must be prepared. It should give information about all the important items and transactions, like total cash received from customers, total payment to creditors, purchase of furniture, totals for various expenses (salaries, wages, rent, etc.) The summary will begin with the opening cash and bank balance and must also show the cash in hand and the bank balance at the end of the year. Cash sales will be shown separately in the summary.
Quite often this book shows a missing figure of cash or bank balance in the beginning or at the end as the case may be. Expenses and gains can also be ascertained from the summary of the Cash Book which may be called Receipts and Payment Account. Expenses will be on the payments side and gains on the receipts sides.
The amount must be adjusted for outstanding and prepaid items and then only shown in the Profit & Loss Account. One should remember that the summary of the Cash Book will also reveal purchases of fixed assets and investments, repayments of loans, sale of fixed assets and loans taken by the firm. These do not concern the profit and loss account; the relevant balance sheet items will be adjusted.
The depreciation on fixed assets must be calculated (this information will not be available from the cash book) and debited in the Profit & Loss Accounts it must, of course, be deducted from the asset concerned when the balance sheet is prepared.
(3) Other Accounts – Then prepare
(i) Total Debtor’s Account,
(ii) Total Creditor’s Account,
(iii) Bills Receivable Account, and
(iv) Bills Payable Account. Those accounts help in finding out the balances of personal accounts, the amount of credit sales and credit purchases and any other relevant information.
(4) Total Sales and Total Purchases – Calculate total sales by adding credit and cash sales. Similarly, calculate total purchases by adding credit and cash purchases.
(5) Final Accounts – Now, prepare Trading Account, Profit & Loss Account and Balance Sheet from the various information given in the question and from the computation made as above.
Question 3.
Explain how the following may be ascertained from incomplete records :
(a) Opening capital and closing capital
(b) Credit sales and credit purchases
(c) Payment to creditors and collection from debtors
(d) Closing balance of cash.
Answer:
(a) Ascertaining Opening Capital and Closing Capital – Opening and closing capital can be ascertained by preparing a statement of affairs at the beginning of the accounting period and at the end of the accouning period respectively. ‘
(b) Ascertain Credit Sales and Purchases – Credit sales and credit purchases can be ascertain by preparing Total Debtor’s Account and Total Creditor’s Account respectively.
(c) Ascertain Payment to Creditors and Collection from Debtors – Collection from Debtors can be ascertained from Total Debtors Account or Cash and Bank Account Summary. Payments to Creditors can be ascertained from Total Creditors Account or Cash and Bank Account Summary.
(d) Ascertain Closing Balance of Cash – Closing balance of cash can be ascertained from Cash and Bank Account Summary.
Numerical Questions
Ascertainment of profit or loss by statement of affairs method
Question 1.
Following information is given below, prepare the statement of profit or loss :
Capital at the end of the year — 5,00,000
Capital in the beginning of the year — 7,50,000
Drawings made during the period — 3,75,000
Additional Capital introduced — 50,000
Answer :
Net Prorfit = Capital at end – Capital at beginning + Drawings during the year – Capital introduced during the year
= Rs. 5,00,000 – Rs. 7,50,000 + Rs. 3,75,000 – Rs. 50,000 = Rs. 75,000.
Question 2.
Manveer started his business on January 1,2011 with a capital of Rs. 4,50,000. On December 31, 2011 his position was as under:
Cash — 99,000
Bills Receivable — 75,000
Plant 48,000
Land and Building 1,80,000
Furniture 50,000
He owned Rs. 45,000 from his friend Susheel on that date. He withdrew Rs. 8,000 per month for his household purposes. Ascertain his profit or loss for the year ended December 31,2011. Solution :
Opening Capital Given = Rs. 4,50,000
Answer :
Or
Net Prorfit = Capital at end – Capital at beginning + Drawings during the year
= Rs. 4,07,000 – Rs. 4,50,000 + Rs. 96,000 = Rs. 53,000.
Question 3.
From the information given below to ascertain the profit for the year :
Capital at the beginning of the year — 70,000
Additional capital introduced during the year — 17,500
Stock — 59,500
Sundry debtors — 25,900
Business premises — 8,600
Machinery — 2,100
Sundry creditors — 33,400
Drawing made during the year — 26,400
Answer:
Or
Net Prorfit = Capital at end – Capital at beginning + Drawing during the year – Capital introduced during the year
= Rs. 62,700 – Rs. 70,000 + Rs. 26,400 – Rs. 17,500 = Rs. 1,600.
Question 4.
From the following information, calculate Capital at the beginning :
Capital at the end of the year — Rs. 4,00,000
Drawings made during the year — Rs.60,000
Fresh Capital intorduce during the year — Rs.1,00,000
Profit of the current year — Rs.80,000
Solution :
Capital at the beginning = Capital at the end + Drawing during the year – Fresh Capital introduced – Profit of the current year = Rs. 4.00,000 + Rs. 60,000 – Rs. 1,00,000 – Rs. 80,000 = Rs. 2,80,000.
Question 5.
Following information is given below, calculate the closing capital:
Calculation of profit or loss and ascertainment of statement of affairs at the end of the year
(Opening balance is given).
Answer:
..
Net Profit = Closing Capital – Opening Capital = Rs. 20,000 – Rs. 22,000 = – (Rs. 2,000)
Net Loss = Rs. 2,000.
Question 6.
Mrs. Anu started firm with a capital of Rs. 4,00,000 on 1st July, 2011. She borrowed from her friends a sum of Rs. 1,00,000 @ 10% per annum (interest paid) for business and brought a further amount to capital Rs. 75,000 on Dec. 31,2011, her position was :
Cash — Rs 30,000
Stock — Rs 4,70,000
Debtors — Rs 3,50,000
Creditors — Rs 3,00,000
She withdrew Rs. 8,000 per month for the year. Calculate profit or loss for the year and show your working clearly.
Solution :
Opening Capital on July 1,2011 = Rs. 4,00,000
Accounting period = 6 months
Or
Net Profit = Capital at the end – Capital at the beginning + Drawing during the year – Capital introduced during the year
= Rs. 4,50,000 – Rs. 4,00,000 + Rs. 48,000 – Rs. 75,000 = Rs. 23,000.
Question 7.
Mr. Arnav docs not keep proper records of his business, he provided following information, you are required to prepare a statement showing the profit or loss for the year.
Capital at the beginning of the year — Rs15,00,000
Bills Receivable — Rs 60,000
Cash in hand — Rs 80,000
Furniture — Rs 9,00,000
Building — Rs 10,00,000
Creditors — Rs 6,00,000
Stock in trade — Rs 2,00,000
Further capital introd uced — Rs 3,20,000
Drawings made during the period — Rs 80,000
Ascertainment of statement of affairs at the beginning and at end of the year and calculation of profit or loss.
Answer:
Or
Net Profit = Capital at the end – Capital at the beginning + Drawing during the year – Capital introduced during the year
= Rs. 16,40,000 – Rs. 15,00,000 + Rs. 80,000-Rs. 3,20,000 = -(Rs. 1,00,000)
Net Loss = Rs. 1,00,000.
Question 8.
Mr. Akshat keeps his books on incomplete records, following information is given below :
During the year he withdrew Rs. 45,000 and introduced Rs.25,000 as further capital in the business compute the profit or loss of the business.
Answer:
Drawing during the year = Rs. 45,000
Additional Capital = Rs. 25,000
Net Profit = Capita! at the end – Capital at the beginning + Drawing during the year – Capital introduced during the year
= Rs. 1,74,000 – Rs. 1,32,500 + Rs. 45,000 – Rs. 25,000 = Rs. 61,500.
Question 9.
Gopal does not keep proper books of account. Following information is given below :
During the year he introduced Rs. 20,000 and withdrew Rs. 12,000 from the business. Prepare the statement of profit or loss on the basis of given information.
Answer:
Or
Net Profit = Capital at the end – Capital at the beginning Drawing during the year – Capital introduced during the year
= Rs. 1,76,000 – Rs. 1,30,500 + Rs. 12,000 – Rs. 20,000 = Rs. 37,500.
Question 10.
Mr. Muneesh maintains his books of accounts from incomplete records. His books provide the information :
He withdrew Rs. 300 per month for personal expenses. He sold his investment of Rs. 16,000 at 2% premium and introduced that amount into business.
Answer:
Statement of Affairs of Mr. Muneesh as at Jan. 1,2011
Or
Net Profit = Capital at the end – Capital in beginning + Drawing during the year – Capital introduced during the year = Rs. 56,400 – Rs. 33,900 + Rs. 3,600 – Rs. 16,320 = Rs. 9,780.
Question 11.
Mr. Girdhari Lai does not keep full double entry records. His balance as on January 1,2012 is as :
His position at the end of the year is :
Cash in hand — Rs 7,000
Stock — Rs 8,600
Debtors — Rs 23,800
Furniture — Rs 15,000
Plant — Rs 20,350
Bills payable — Rs 20,200
Creditors — Rs 15,000
He withdrew Rs. 500 per month out of which he spent Rs. 1,500 for business purpose. Prepare the statement of profit or loss.
Answer:
Or
Net Profit = Capital at the end-Capital at the beginning Drawing during the year – Capital introduced during the year = Rs. 39,550 – Rs. 40,000 + Rs. 4,500 – 0 = Rs. 4,050
Net Profit is Rs. 4,050.
Question 12.
Mr. Ashok does not keep his books properly. Following information is available from his books :
Drawing during the year Rs. 1,500 x 7 months = Rs. 10,500 Rs. 4,500 x 5 months = Rs. 22,500
Total drawing = Rs. 33,000 Statement of Profit for the year ended Dec. 31,2011
Answer:
Net Loss = Rs. 60,900.
Or
Net Profit = Capital attheend-Capitai in the beginning + Drawing during the year – Capital introduced during the year
= – (Rs. 25,000) + Rs. 33,000 – Rs. 18.900 – Rs. 50,000 = – (Rs. 60,900)
Net Loss = Rs. 60,900.
Question 13.
Krishna Kulkarni has not kept proper books of accounts, prepare the statement of profit or loss for the year ending December 31, 2005 from the following information :
The following adjustments were made :
(a) Krishna withdrew cash Rs. 5,000 per mouth for private use.
(b) Depreciation @ 5% on car and furniture @ 10%.
(c) Outstanding Rent Rs. 6,000.
(d) Fresh Capital introduced during the year Rs. 30,000.
Answer:
Question 14.
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, 2011 :
Drawing Rs. 10,000 p.m. for personal use, fresh capital introduced during the year Rs. 2,00,000. A bad debts of Rs. 2,000 and a provision of 5% is to be made on debtors, outstanding salary Rs. 2,400, prepaid insurance Rs. 700, depreciation charged on fhrnifure and machine @ 10% p.a.
Answer:
Ascertainment of Missing Figures
Question 15.
From the following information calculate the amount to be paid to creditors :
Sundry creditors as on March 31,2011 — Rs 1,80,425
Discount received — Rs 26,000
Discount allowed — Rs 24,000
Return outwards — Rs 37,200
Return inward — Rs 32,200
Bills accepted — Rs 1,99,000
Bills endorsed to creditors — Rs 26,000
Creditors as on April 1, 2006 — Rs 2,09,050
Total purchases — Rs 8,97,000
Cash purchases — Rs 1,40,000
Answer:
Question 16.
Find out the credit purchases from the following :
Balance of creditors April 1,2010 — Rs 45,000
Balance of creditors March 31,2011 — Rs 36,000
Cash paid to creditors — Rs 1,80,000
Cheque issued to creditors — Rs 60,000
Cash purchases — Rs 75,000
Discount received from creditors — Rs 5,400
Discount allowed — Rs 5,000
Bills payable given to creditors — Rs 12,750
Return outwards — Rs 7500
Bills payable dishonoured — Rs 3,000
Bills receivable endorsed to creditors — Rs 4,500
Bills receivable endorsed to creditors dishonoured 1,800 Return inwards — Rs 3,700
Question 17.
From the following information calculate total purchases
Creditors Jan. 1, 2011 — Rs 30,000
Creditors Dec. 31, 2011 — Rs 20,000
Opetiing balance of bills payable — Rs 25,000
Closing balance of bills payable — Rs 35,000
Cash paid to creditors — Rs 1,5 1,000
Bills discharged — Rs 44,500
Cash purchases — Rs 1,29,000
Return outwards — Rs 6,000
Answer:
Total Purchases = Credit Purchases + Cash Purchases
= Rs. 2,01,500 + Rs. 1,29,000
= Rs. 3,30,500.
Question 18.
The following information is given :
Opening creditors — Rs 60,000
Cash paid to creditors — Rs 30,000
Closing creditors — Rs 36,000
Returns Inward — Rs 13,000
Bill matured — Rs 27,000
Bill dishonoured — Rs 8,000
Purchases return — Rs 12,000
Discount allowed — Rs 5,000
Calculate credit purchases during the year.
Answer:
Dr. Total Creditors A/c Cr.
Question 19.
From the following calculate the amount of bills accepted during the year :
Bills payable as on April 1, 2011 — Rs 1,80,000
Bills payable as on March 31, 2012 — Rs 2,20,000
Bills payable dishonoured during the year — Rs 28,000
Bills payable honoured during the year — Rs 50,000
Answer:
Question 20.
Find out the amount of bills matured during the year on the basis of information given below :
Bills payable dishonoured — Rs 37,000
Closing balance of bills payable — Rs 85,000
Opening balance of bills payable — Rs 70,000
Bills payable accepted — Rs 90,000
Cheque dishonoured — Rs 23,000
Answer:
Question 21.
Prepare the bills payable account from the following and find out missing figure if any :
Bills accepted — Rs. 1,05,000
Discount received — Rs 17,000
Purchases returns — Rs 9,000
Return inwards — Rs 12,000
Cash paid to accounts payable — Rs 50,000
Bills receivable endorsed to creditors — Rs 45,000
Bills dishonoured — Rs 17,000
Bad debts — Rs 14,000
Balance of accounts payable (closing) — Rs 85,000
Credit purchases — Rs 2,15,000
Answer:
Question 22.
Calculate the amount of bills receivable during the year.
Opening balance of bills receivable — Rs 75,000
Bill dishonoured — Rs 25,000
Bills collected (honoured) — Rs 130,000
Bills receivable endorsed to creditors — Rs 15,000
Closing balance of bills receivable — Rs 65,000
Answer:
Bills receivable during the year = Rs. 1,60,000.
Question 23.
Calculate the amount of bills receivable dishonoured from the following information :
Opening balance of bills receivable — Rs 1,20,000
Bills collected (honoured) — Rs 1,85,000
Bills receivable endorsed — Rs 22,800
Closing balance of bills receivable — Rs 50,700
Bills receivable received — Rs 1,50,000
Answer:
Bills receivable dishonoured = Rs. 11,500.
Question 24.
From the details given below, find out the credit sales and total sales:
Opening debtors — Rs 45000
Closing debtors — Rs 56000
Discount allowed — Rs 2.500
Sales returns — Rs 8,500
Irrecoverable account — Rs 4,000
Bills receivable received — Rs 12,000
Bills receivable dishonoured — Rs 3,000
Cheque dishonoured — Rs 7,700
Cash sales — Rs 80,000
Cash received from debtors — Rs 230,000
Cheque received from debtors — Rs 25,000
Solution:
Credit sale during the year = Rs. 2,82,300.
Total Sales = Credit Sales + Cash Sales
= Rs. 2,82,300 + Rs. 80,000
= Rs. 3,62,300.
Question 25.
From the following information, prepare the bills receivable account and total debtors account for the year ended December 31,2011:
Opening balance of debtors — Rs. 1,80,000
Opening balance of bills receivable — Rs. 55,000
Cash sales made during the year — Rs. 95,000
Credit sales made during the year — Rs. 14,50,000
Return inwards — Rs. 78,000
Cash received from debtors — Rs. 10,25,000
Discount allowed to debtors — Rs. 55,000
Bills receivable endorsed to creditors — Rs. 60,000
Cash receivable (bills matured) — Rs. 80,500
Irrecoverable amount — Rs. 10,000
Closing balance of bills receivable on Dec. 31,2011 — Rs. 75,500
Answer:
Closing balance of debtors = Rs. 3,01,000 Bills received = Rs. 1,61,000.
Question 26.
Prepare the suitable accounts and find out the missing figure if any :
Opening balance of debtors — Rs. 14,00,000
Opening balance of bills receivable — Rs. 7,00,000
Closing balance of bills receivable — Rs. 3,50,000
Cheque dishonoured — Rs. 27,000
Cash received from debtors — Rs. 10,75,000
Cheque received and deposited in the bank — Rs. 8,25,000
Discount allowed — Rs. 37,500
Irrecoverable amount — Rs. 17,500
Returns inwards — Rs. 28,000
Bills receivable received from customers — Rs. 1,05,000
Bills receivable matured — Rs. 2,80,000
Bills discounted — Rs. 65,000
Bills endorsed to creditors — Rs. 70,000
Answer:
Question 27.
From the following information ascertain the opening balance of sundry debtors and closing balance of sundry creditors :
Opening stock — Rs. 30,000
Closing stock — Rs. 25,000
Opening creditors — Rs. 50,000
Closing debtors — Rs. 75,000
Discount allowed by creditors — Rs. 1,500
Discount allowed to customers , — Rs. 2,500
Cash paid to creditors — Rs. 1,35,000
Bills payable accepted during the period — Rs. 30,000
Bills receivable received during the period — Rs. 75,000
Cash received from customers — Rs. 2,20,000
Bills receivable dishonoured — Rs.3,500
Purchases — Rs. 2,95,000
The rate of gross profit is 25% on selling price and out of the total sales Rs. 85,000 was for cash sales.
Answer :
Working Notes :
Cost of Goods Sold = Opening Stock + Purchases – Closing Stock
= Rs. 30,000 + Rs. 2,95.000 – Rs. 25,000
= Rs 3,00,000.
Question 28.
Mrs. Bhavana keeps her 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:
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 :
(a) Provision on debtors
5% on 85,000 = Rs. 4,250
(b) Depreciation on
Plant 10% of 1,00,000 = Rs. 10,000
Machinery 5% of 50,000 = Rs. 2,500
Land & Building 10% of 2,50,000 = Rs. 25,000.