Page 179 - DEBK-XI(2020)

Accounts from Incomplete Records—Single Entry System 20.7

` 3,000 for domestic purposes. In September, 2017, he had received a lottery prize of
` 6,000, which he invested in the business. He sold his personal car for ` 7,000 and the
proceeds were utilised for business. He wants his furniture to be depreciated at 10%
and a provision for doubtful debts to be created at 5%. He had not paid two months’
salary to his peon @ ` 225 per month and two months’ rent outstanding amounting to
` 300. Commission earned but not received by him was ` 3,600.
Prepare Statement of Profit or Loss for the year ended 31st March, 2018.

Solution: Calculation of Opening Capital:
STATEMENT OF AFFAIRS (OPENING) as at 1st April, 2017
Liabilities ` Assets `
Balance at Bank (Bank Overdraft) 3,150 Cash in Hand 150
Sundry Creditors 37,500 Stock-in-Trade 22,500
Bills Payable 1,500 Sundry Debtors 45,000
Capital (Opening) (Balancing Figure) 40,500 Furniture 7,500
Investments 7,500
82,650 82,650
Calculation of Closing Capital:

STATEMENT OF AFFAIRS (CLOSING) as at 31st March, 2018
Liabilities ` Assets `
Sundry Creditors 40,500 Cash in Hand 600
Bills Payable 750 Balance at Bank 8,400
Loan from Mr. Faithful 4,500 Accrued Commission 3,600
Outstanding Salaries (` 225 × 2) 450 Stock-in-Trade 30,000
Outstanding Rent 300 Sundry Debtors 42,800
Capital (Closing) (Balancing Figure) 53,900 Furniture 7,500
Investments 7,500
1,00,400 1,00,400

STATEMENT OF PROFIT OR LOSS for the year ended 31st March, 2018
Particulars `
Capital at the end (Closing Capital) 53,900
Add: Drawings during the year (WN 1) 14,550
68,450
Less: Opening Capital 40,500
Capital introduced during the year (WN 2) 13,000 53,500
Profit before Adjustment 14,950
Less: Adjustments:
(i) Depreciation on Furniture (10% of ` 7,500) 750
(ii) Provision for Doubtful Debts (5% of ` 42,800) 2,140 2,890
Net Profit for the year 12,060