NCERT Solutions Class 11 Accountancy Chapter 11

Q.1 State the meaning of incomplete records?

Ans.

Accounting records that are not maintained according to Double entry system are known as Accounts from Incomplete Records or Single Entry System of Accounting.

Q.2 What are the possible reasons for keeping incomplete records?

Ans.

Reasons for incompleteness are:

• This system can be adopted by people who do not have the proper knowledge of accounting principles.
• It is an inexpensive mode of maintaining records. Cost involved is low as specialised accountants are not appointed by the organisations.
• Time consumed in maintaining records is less as only a few books are maintained.
• It is a convenient mode of maintaining records as the owner may record only important transactions according to the need of the business.

Q.3 Distinguish between statement of affairs and balance sheet.

Ans.

Comparison between Statement of Affairs and Balance Sheet:

Basis	Statement of affairs	Balance sheet
Reliability	It is less reliable as it is prepared from incomplete records.	It is more reliable as it is prepared from double entry records.
Objective	The objective of preparing statement of affairs is to estimate the balance in capital account on a particular date.	The objective of preparing balance sheet is to show the true financial position of an entity on a particular date.
Omission	Omission of assets or liabilities cannot be discovered easily.	Omissions of assets or liabilities can be discovered easily and can be traced from accounting records.
Accounts and Information	In view of incomplete accounts, its preparation is based on limited accounts, calculations, estimates and other information.	This is prepared exclusively figures, Balance Sheet is regarded as a reliable statement.

Q.4 What practical difficulties are encountered by a trader due to incompleteness of accounting records?

Ans.

Limitation of Incomplete records are as follows:

• As double entry system is not followed, a trial balance cannot be prepared and accuracy of accounts cannot be ensured.
• Correct ascertainment and evaluation of financial result of business operations cannot be made.
• Analysis of profitability, liquidity and solvency of the business cannot be done. This may cause a problem in raising funds from outsiders and planning future business activities.
• The owners face great difficulty in filing an insurance claim with an insurance company in case of loss of inventory by fire or theft.

Q.5 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?

Ans.

A statement of affairs is a statement of assets and liabilities. Under this method, statements of assets and liabilities as at the beginning and at the end of the relevant accounting period are prepared to ascertain the amount of change in the capital during the period.

Statement of affairs shows assets on one side and the liabilities on the other just as in case of a balance sheet. The difference between the totals of the two sides is the capital.

Once the amount of capital, both at the beginning and at the end is computed with the help of statement of affairs, a statement of profit and loss is prepared to ascertain the exact amount of profit or loss made during the year.

The difference between the opening and closing capital represents its increase or decrease which is to be adjusted for withdrawals made by the owner or any fresh capital introduced by him during the accounting period.

If the net result of above computation is a positive amount, it represents the profit earned during the year. In case the net result is a negative amount, it represents the loss during the year.

Profit or Loss = Capital at end – Capital at beginning + Drawings during the year – Capital introduced during the year.

Q.6 ‘Is it possible to prepare the profit and loss account and the balance sheet from the incomplete book of accounts kept by a trader? Do you agree? Explain.

Ans.

The main purpose of any business is to earn profit. To prepare proper trading and profit and loss account and the balance sheet one needs complete information regarding expenses, incomes, assets and liabilities.

This can be done in two ways:

• Preparing the Statement of Affairs as at the beginning and as at the end of the accounting period called statement of affairs or net worth method.
• Preparing Trading and profit and loss account and the Balance Sheet by putting the accounting records in proper order called conversion method.

Statement of Affairs Method:

A statement of affairs is a statement of assets and liabilities. Under this method, statements of assets and liabilities as at the beginning and at the end of the relevant accounting period are prepared to ascertain the amount of change in the capital during the period.

Once the amount of capital, both at the beginning and at the end is computed with the help of statement of affairs, a statement of profit and loss is prepared to ascertain the exact amount of profit or loss made during the year.

Conversion method:

Converting the accounts from single entry to double entry is called as conversion method.

The steps involved in converting single entry into double entry are:

• Prepare cash and bank summary.
• Prepare Total Debtors Account.
• Prepare Bills Receivable Account.
• Prepare Total Creditors Account.
• Prepare Bills Payable Account.
• Prepare Stock Account.
• Prepare Revenue Expenses Account.
• Prepare Revenue Income Account.
• Prepare Fixed Asset Account.
• Prepare Opening Statement of Affairs.
• Then prepare trading account, profit and loss account and balance sheet from the various information given.

Q.7 Explain how the following may be ascertained from incomplete records.

1. Opening capital and closing capital.
2. Credit sales and credit purchases.
3. Payments to creditors and collection from debtors.
4. Closing balance of cash.

Ans.

a) Opening capital can be ascertained by preparing a Statement of Affairs at the beginning of the accounting period.

Closing capital can be ascertained by preparing a Statement of Affairs at the end of the accounting period.

The difference between the opening and closing capital represents its increase or decrease which is to be adjusted for withdrawals made by the owner or any fresh capital introduced by him during the accounting period in order to arrive at the amount of profit or loss made during the period.

b) Credit purchases can be ascertained by preparing the total creditors account.

Credit sales can be ascertained from total debtors account, the sales returns should be deducted from gross credit sales to get net credit sales.

c) Payment to creditors and collection from debtors can be ascertained by preparing total creditors and total debtors account

d) Closing balance of cash can be ascertained from the cash book summary.

Q.8 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.

Ans.

Statement of Profit or Loss For the year ended
Particulars
Capital at the end of the year	5,00,000
(+) Drawings during the year	3,75,000
	8,75,000
(-) Additional Capital introduced	50,000
	8,25,000
(-) Capital at the beginning of the year	7,50,000
Profit made during the year (b/f)	75,000

Q.9 Manveer started his business on April 01, 2016 with a capital of 4,50,000. On March 31, 2017 his position was as under:

• Cash: 99,000
• Bills receivable: 75,000
• Plant: 48,000
• Land & Building: 1,80,000
• Furniture: 50,000.

He owned 45,000 from his friend Susheel on that date. He withdrew 8,000 per month for his household purposes. Ascertain his profit or loss for this year ended March 31, 2017.

Ans.

Statement of Affairs As on 31st March, 2017
Liabilities		Assets
Loan from Susheel	45,000	Cash	99,000
Capital		Bills Receivable	75,000
(Balancing Figure)	4,07,000	Plant	48,000
		Land & Building	1,80,000
		Furniture	50,000
	4,52,000		4,52,000

Statement of Profit or Loss For the year ended on 31st March, 2017
Particulars
Capital at the end of the year	4,07,000
(+) Drawings during the year (8,000 × 12)	96,000
	5,03,000
(-) Capital at the beginning of the year	4,50,000
Profit made during the year	53,000

Q.10 From the information given below 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
• Drawings made during the year: 26,400

Ans.

Statement of Affairs As on …
Liabilities		Assets
Sundry Creditors	33,400	Stock	59,500
Capital		Sundry Debtors	25,900
(Balancing Figure)	62,700	Business Premises	8,600
		Machinery	2,100
	96,100		96,100

Statement of Profit or Loss For the year ended
Particulars
Capital at the end of the year	62,700
(+) Drawings during the year	26,400
	89,100
(-) Additional Capital introduced during the year	17,500
	71,600
(-) Capital at the beginning of the year	70,000
Profit made during the year	1,600

Q.11 From the following information, Calculate Capital at the beginning:

• Capital at the end of the year: 4,00,000
• Drawings made during the year: 60,000
• Fresh capital introduce during the year: 1,00,000
• Profit of the current year: 80,000

Ans.

Statement of Profit or Loss For the year ended on 31st March, 2017
Particulars
Capital at the end of the year	4,00,000
(+) Drawings during the year	60,000
	4,60,000
(-) fresh Capital introduced during the year	1,00,000
	3,60,000
(-) Profit of the Current year	80,000
Capital at the Beginning of the Year	2,80,000

Note:
As per the solution, the opening capital should be of 2,80,000; but, the answer given in the book is 2,60,000.

Q.12 Following information is given below: calculate the closing capital:

Particulars	01/04/2016	31/03/2017
Creditors	5,000	30,000
Bills Payable	10,000	_____
Loan	_____	50,000
Bills Receivable	30,000	50,000
Stock	5,000	30,000
Cash	2,000	20,000

Ans.

Statement of Affairs As on 1st April, 2016
Liabilities		Assets
Creditors	5,000	Bills Receivable	30,000
Bills payable	10,000	Stock	5,000
Capital (b/f)	22,000	Cash	2,000
	37,000		37,000

Statement of Affairs As on 31st March, 2017
Liabilities		Assets
Creditors	30,000	Bills Receivable	50,000
Loan	50,000	Stock	30,000
Capital (b/f)	20,000	Cash	20,000
	1,00,000		1,00,000

Statement of Profit or Loss For the year ended on 31st March, 2017
Particulars
Capital at the end of the year	20,000
(-) Capital at the beginning of the year	22,000
Loss during the year	2,000

Q.13 Mrs. Anu started firm with a capital of 4,00,000 on 1^st October, 2016. She borrowed from her friends a sum of 1,00,000 @ 10% per annum (interest paid) for business and brought a further amount to capital 75,000 on March 31, 2017, her position was:

Particulars
Cash	30,000
Stock	4,70,000
Debtors	3,50,000
Creditors	3,00,000

She withdrew 8,000 per month for the year. Calculate profit or loss for the year and show your working clearly.

Ans.

Statement of Affairs As on 31st March, 2017
Liabilities		Assets
Creditors	3,00,000	Cash	30,000
Loans from friends	1,00,000	Stock	4,70,000
Capital (bal. figure)	4,50,000	Debtors	3,50,000
	8,50,000		8,50,000

Statement of Profit or Loss For the year ended on 31st March, 2017
Particulars
Capital at the end of the year	4,50,000
(+) Drawings during the year (8000 × 6)	48,000
	4,98,000
(-) Additional Capital introduced	75,000
	4,23,000
(-) Capital at the Beginning of the Year	4,00,000
Profit made during the year 2017	23,000

Q.14 Mr. Arnav does 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.

Particulars
Capital at the beginning	15,00,000
Bills receivable	60,000
Cash in hand	80,000
Furniture	9,00,000
Building	10,00,000
Creditors	6,00,000
Stock in trade	2,00,000
Further capital introduced	3,20,000
Drawings made during the period	80,000

Ans.

Statement of Affairs As on …….
Liabilities		Assets
Creditors	6,00,000	Bills Receivables	60,000
Capital (bal. figure)	16,40,000	Cash in Hand	80,000
		Furniture	9,00,000
		Buildings	10,00,000
		Stock in Trade	2,00,000
	22,40,000		22,40,000

Statement of Profit or Loss At the end of the year
Particulars
Capital at the end of the year	16,40,000
(+) Drawings during the year	80,000
	17,20,000
(-) Capital introduced during the year	3,20,000
	14,00,000
(-) Capital at the Beginning of the Year	15,00,000
Loss during the year	(1,00,000)

Q.15 Mr. Akshat keeps his books on incomplete records following information is given below:

Particulars	01/04/2016	31/03/2017
Cash in hand	1,000	1,500
Cash at bank	15,000	10,000
Stock	1,00,000	95,000
Debtors	42,500	70,000
Business premises	75,000	1,35,000
Furniture	9,000	7,500
Creditors	66,000	87,000
Bills payable	44,000	58,000

During the year he withdrew 45,000 and introduced 25,000 as further capital in the business compute the profit or loss of the business.

Ans.

Statement of Affairs As on 1st April, 2016
Liabilities		Assets
Creditors	66,000	Cash in Hand	1,000
Bills Payable	44,000	Cash at bank	15,000
Capital (Bal. figure)	1,32,500	Stock	1,00,000
		Debtors	42,500
		Business Premises	75,000
		Furniture	9,000
	2,42,500		2,42,500

Statement of Affairs As on 31st March, 2017
Liabilities		Assets
Creditors	87,000	Cash in Hand	1,500
Bills Payable	58,000	Cash at bank	10,000
Capital (Bal. figure)	1,74,000	Stock	95,000
		Debtors	70,000
		Business Premises	1,35,000
		Furniture	7,500
	3,19,000		3,19,000

Statement of Profit or Loss For the year 31 March 2017
Particulars
Capital at the end of the year 31/03/2017	1,74,000
(+) Drawings during the year	45,000
	2,19,000
(-) Additional capital introduced	25,000
	1,94,000
(-) Capital at the Beginning of the Year 01/04/2016	1,32,500
Profit earned during the year	61,500

Q.16 Gopal does not keep proper books of account. Following information is given below:

Particulars	01/04/2016	31/03/2017
Cash in hand	18,000	12,000
Cash at bank	1,500	2,000
Stock in trade	80,000	90,000
Sundry debtors	36,000	60,000
Sundry Creditors	60,000	40,000
Loan	10,000	8,000
Office equipments	25,000	30,000
Land & Buildings	30,000	20,000
Furniture	10,000	10,000

During the year he introduced 20,000 and withdrew 12,000 from the business. Prepare the statement of profit or loss on the basis of given information.

Ans.

Statement of Affairs As on 1st April, 2016
Liabilities		Assets
Sundry Creditors	60,000	Cash in Hand	18,000
Loan	10,000	Cash at bank	1,500
Capital (Bal. figure)	1,30,500	Stock in trade	80,000
		Sundry Debtors	36,000
		Office Equipments	25,000
		Land & Building	30,000
		Furniture	10,000
	2,00,500		2,00,500

Statement of Affairs As on 31st March , 2017
Liabilities		Assets
Sundry Creditors	40,000	Cash in Hand	12,000
Loan	8,000	Cash at bank	2,000
Capital (Bal. figure)	1,76,000	Stock in trade	90,000
		Sundry Debtors	60,000
		Office Equipments	30,000
		Land & Building	20,000
		Furniture	10,000
	2,24,000		2,24,000

Statement of Profit or Loss For the year 2017
Particulars
Capital at the end of the year 31/03/2017	1,76,000
(+) Drawings during the year	12,000
	1,88,000
(-) Additional capital introduced	20,000
	1,68,000
(-) Capital at the Beginning of the Year 01/04/2016	1,30,500
Profit earned during the year	37,500

Note: As per the solution, the profit earned for the year 2017 should be 37,500; whereas, in the text book, the profit earned is 53,500.

Q.17 Mr. Muneesh maintains his books of accounts from incomplete records. His books provide the information:

Particulars	01/04/2016	31/03/2017
Cash	1,200	1,600
Bills receivable	_____	2,400
Debtors	16,800	27,200
Stock	22,400	24,400
Investment	_____	8,000
Furniture	7,500	8,000
Creditors	14,000	15,200

He withdrew 300 per month for personal expenses. He sold his investment of 16,000 at 2% premium and introduced that amount into business.

Ans.

Statement of Affairs As on 1st April, 2016
Liabilities		Assets
Creditors	14,000	Cash	1,200
Capital (Bal. figure)	33.900	Debtors	16,800
		Stock	22,400
		Furniture	7,500
	47,900		47,900

Statement of Affairs As on 31st March, 2017
Liabilities		Assets
Creditors	15,200	Cash	1,600
Capital (Bal. figure)	56,400	Bills Receivable	2,400
		Debtors	27,200
		Stock	24,400
		Investment	8,000
		Furniture	8,000
	71,600		71,600

Statement of Profit or Loss For the year 2017
Particulars
Capital at the end of the year 31/03/2017	56,400
(+) Drawings during the year (300 x 12)	3,600
	60,000
(-) Additional capital introduced	16,320
	43,680
(-) Capital at the Beginning of the Year 01/04/2016	33,900
Profit earned during the year	9,780

Working Note:
Additional capital introduced during the year:
16,000 + 2% = 16,320
Because investment were sold at 2% profit and the same introduced in the business.

Q.18 Mr. Girdhari Lal does not keep full double entry records. His balance as on April 01, 2016 is as:

Liabilities		Assets
Sundry creditors	35,000	Cash in hand	5,000
Bills payable	15,000	Cash at bank	20,000
Capital	40,000	Sundry debtors	18,000
		Stock	22,000
		Furniture	8,000
		Plant	17,000
	90,000		90,000

His position at the end of the year is:

Particulars
Cash in hand	7,000
Stock	8,600
Debtors	23,800
furniture	15,000
Plant	20,350
Bills payable	20,200
Creditors	15,000

He withdrew 500 per month out of which to spent 1,500 for business purpose. Prepare the statement of profit or loss.

Ans.

Statement of Affairs As on 31st March, 2017
Liabilities		Assets
Bills Payable	20,200	Cash in hand	7,000
Creditors	15,000	Stock	8,600
Capital (Bal. figure)	39,550	Debtors	23,800
		Furniture	15,000
		Plant	20,350
	74,750		74,750

Statement of Profit or Loss For the year 2017
Particulars
Capital at the end of the year 31/03/2017	39,550
(+) Drawings during the year (500 x 12)	6,000
	45,550
(-) Additional capital introduced	1,500
	44,050
(-) Capital at the Beginning of the Year 01/04/2016	40,000
Profit earned during the year	4,050

Q.19 Mr. Ashok does not keep his books properly. Following information is available from his books.

Particulars	01/04/2016	31/03/2017
Sundry creditors	45,000	93,000
Loan from wife	66,000	57,000
Sundry debtors	22,500	_____
Land & Building	89,600	90,000
Cash in hand	7,500	8,700
Bank overdraft	25,000	_____
Furniture	1,300	1,300
Stock	34,000	25,000

During the year Mr. Ashok sold his private car for 50,000 and invested this amount into the business. He withdrew from the business 1,500 per month up to October 31, 2016 and thereafter 4,500 per month as drawings.

You are required to prepare the statement of profit or loss and statement of affair as on March 31, 2017.

Ans.

Statement of Affairs As on 1st April, 2016
Liabilities		Assets
Sundry Creditors	45,000	Sundry Debtors	22,500
Loan from wife	66,000	Land & Buildings	89,600
Bank Overdraft	25,000	Cash in Hand	7,500
Capital (Bal. figure)	18,900	Furniture	1,300
		Stock	34,000
	1,54,900		1,54,900

Statement of Affairs As on 31st March, 2017
Liabilities		Assets
Sundry Creditors	93,000	Land & Buildings	90,000
Loan from Wife	57,000	Cash in Hand	8,700
		Furniture	1,300
		Stock	25,000
		Capital (Bal. figure)	25,000
	1,50,000		1,50,000

Statement of Profit or Loss For the year 2017
Particulars
Capital at the end of the year 31/03/2017	(25,000)
(+) Drawings during the year (1500 × 7 months = 10,500) (4,500 × 5 months = 22,500)	33,000
	(8,000)
(-) Additional capital introduced	(50,000)
	(42,000)
(-) Capital at the Beginning of the Year 01/04/2016	(18,900)
Profit earned during the year	(60,900)

Note: As per the solution, the loss incurred during the year 2017 is 60,900, whereas the loss given in the book shows 57,900.

Q.20 Krishna Kulkarni has not kept proper books of accounts prepare the statement of profit or loss for the year ending March 31, 2017 from the following information.

Particulars	01/04/2016	31/03/2017
Cash in hand	10,000	36,000
Debtors	20,000	80,000
Creditors	10,000	46,000
Bills receivable	20,000	24,000
Bills Payable	4,000	42,000
Car	_____	80,000
Stock	40,000	30,000
Furniture	8,000	48,000
Investment	40,000	50,000
Bank balance	1,00,000	90,000

The following adjustments were made:

1. Krishna withdrew cash 5,000 per month for private use.
2. Depreciation @ 5% on car and furniture @ 10%.
3. Outstanding Rent 6,000.
4. Fresh Capital introduced during the year 30,000.

Ans.

Statement of Affairs As on 1st April, 2016
Liabilities		Assets
Creditors	10,000	Cash in hand	10,000
Bills Payable	4,000	Debtors	20,000
Capital (Bal. figure)	2,24,000	Bills Receivable	20,000
		Stock	40,000
		Furniture	8,000
		Investment	40,000
		Cash at Bank	1,00,000
	2,38,000		2,38,000

Statement of Affairs As on 31st March, 2017
Liabilities		Assets
Creditors	46,000	Cash in Hand		36,000
Bills Payable	42,000	Debtors		80,000
Outstanding Expenses	6,000	Bills Receivable		24,000
Capital (Bal. figure)	3,35,200	Car	80,000
		(-) Dep. @5%	4,000	76,000
		Furniture	48,000
		(-) Dep @10%	4,800	43,200
		Investment		50,000
		Cash at Bank		90,000
		Stock		30,000
	4,29,200			4,29,200

Statement of Profit or Loss For the year 2017
Particulars
Capital at the end of the year 31/03/2017	3,35,200
(+) Drawings during the year (5,000 × 12 months)	60,000
	3,95,200
(-) Fresh capital introduced	30,000
	3,65,200
(-) Capital at the Beginning of the Year 01/04/2016	2,24,000
Profit earned during the year	1,41,200

Q.21 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 March 31, 2017:

Particulars	31/03/2016	31/03/2017
Cash in hand	6,000	24,000
Bank overdraft	30,000	_____
Stock	50,000	80,000
Sundry Creditors	26,000	40,000
Sundry Debtors	60,000	1,40,000
Bills Payable	6,000	12,000
Furniture	40,000	60,000
Bills Receivable	8,000	28,000
Machinery	50,000	1,00,000
Investment	30,000	80,000

Drawing 10,000 per month for personal use, fresh capital introduce during the year 2,00,000. A bad debts of 2,000 and a provision of 5% is to be made on debtors, outstanding salary 2,400, prepaid insurance 700, depreciation charged on furniture and machine @ 10% p.a.

Ans.

Statement of Affairs As on 31st March, 2016
Liabilities		Assets
Bank Overdraft	30,000	Cash in hand	6,000
Sundry Creditors	26,000	Stock	50,000
Bills Payable	6,000	Sundry Debtors	60,000
Capital (Bal. figure)	1,82,000	Furniture	40,000
		Bills Receivables	8,000
		Machinery	50,000
		Investment	30,000
	2,44,000		2,44,000

Statement of Affairs As on 31st March, 2017
Liabilities		Assets
Sundry Creditors	40,000	Cash in Hand		24,000
Bills Payable	12,000	Stock		80,000
Outstanding Salary	2,400	Debtors	1,40,000
Capital (Bal. figure)	4,33,400	(-) Bad debts	2,000
			1,38,000
		(-) Prov. @5%	6,900	1,31,100
		Furniture	60,000
		(-) Dep.	6,000	54,000
		Machinery	1,00,000
		(-) Dep@10%	10,000	90,000
		Bills Receivables		28,000
		Investment		80,000
		Prepaid Insurance		700
	4,87,800			4,87,800

Statement of Profit or Loss For the year 31st March, 2017
Particulars
Capital at the end of the year 31/03/2017	4,33,400
(+) Drawings during the year (10,000 x 12 months)	1,20,000
	5,53,400
(-) Fresh capital introduced	(2,00,000)
	3,53,400
(-) Capital at the Beginning of the Year 01/04/2016	(1,82,000)
Profit earned during the year	1,71,400

Note: As per the solution, the statement of affair with adjustment is 4,87,800; while, as per the book, the adjustment is 4,87,700.

Q.22 From the following information calculate the amount to be paid to creditors:

Particulars
Sundry Creditors as on March 31, 2017	1,80,425
Discount received	26,000
Discount allowed	24,000
Return outwards	37,200
Return inward	32,200
Bills accepted	1,99,000
Bills endorsed to creditors	26,000
Creditors as on April 01, 2016	2,09,050
Total purchases	8,97,000
Cash purchases	1,40,000

Ans.

Sundry Creditors Account
Dt.	Particulars		Dt.	Particulars
			2017
	To Discount Received	26,000	Mar 31	By Balance b/d	1,80,425
	To Return Outwards	37,200		By Purchase (Credit)	7,57,000
	To Bills accepted	1,99,000
	To Bills endorsed to creditors (b/r)	26,000
	To Creditors as on April 01, 2016	2,09,050
	To Balance c/d	4,40,175
		9,37,425			9,37,425

Working Note:

Credit purchase = Total purchase – Cash purchase

Credit purchase = (8,97,000 – 1,40,000) = 7,57,000

Amount paid to Creditors = 4,40,175

Q.23 Find out the credit purchases from the following:

Particulars
Balance of creditors April 01, 2016	45,000
Balance of creditors March 31, 2017	36,000
Cash paid to creditors	1,80,000
Cheque issued to creditors	60,000
Cash purchases	75,000
Discount received from creditors	5,400
Discount allowed	5,000
Bills payable given to creditors	12,750
Return outwards	7,500
Bills payable dishonoured	3,000
Bills receivable endorsed to creditors	4,500
Bills receivable endorsed to creditors dishonoured	1,800
Return inwards	3,700

Ans.

Sundry Creditors Account
Dt.	Particulars		Dt.	Particulars
	To Cash	1,80,000	2016
	To Bank (Cheque)	60,000	Apr 1	By Balance b/d	45,000
	To Discount received	5,400		By Bills Payable (Dishonoured)	3,000
	To Bills Payable (Accepted)	12,750		By Bills Receivable (Endorsed Dishonoured)	1,800
	To Return Outward	7,500		By Purchase (Credit B/f)	2,56,350
	To Bills Receivable (Endorsed to creditors)	4,500
	To balance c/d	36,000
		3,06,150			3,06,150

Credit purchases for the year 2017 is 2,56,350.

Q.24 From the following information calculate total purchases:

Particulars
Creditors Apr 01, 2016	30,000
Creditors Mar 31, 2017	20,000
Opening balance of bills payable	25,000
Closing balance of bills payable	35,000
Cash paid to creditors	1,51,000
Bills discharged	44,500
Cash purchases	1,29,000
Return outwards	6,000

Ans.

Sundry Creditors Account
Dt.	Particulars		Dt.	Particulars
			2016
	To Cash	1,51,000	Apr 1	By Balance b/d	30,000
	To Bills Payable	54,500		By Purchase (net) (b/f)	2,01,500
	To Return Outwards	6,000
	To Balance c/d	20,000
		2,31,500			2,31,500

Bills Payable Account
Dt.	Particulars		Dt.	Particulars
2017
	To Cash	44,500		By Balance b/d	25,000
Mar 31	To Balance c/d	35,000		By Creditors	54,500
				(Bills Payable)
				(Bal. Figure)
		79,500			79,500

Total Purchases = Cash Purchase + Credit Purchases

Hence, Total Purchases will be:

1,29,000 + 2,01,500 = 3,30,500

Q.25 The following information is given:

Particulars
Opening creditors	60,000
Cash paid to creditors	30,000
Closing creditors	36,000
Returns inward	13,000
Bills matured	27,000
Bill dishonoured	8,000
Purchases return	12,000
Discount allowed	5,000

Calculate credit purchases during the year.

Ans.

Creditors Account
Dt.	Particulars		Dt.	Particulars
	To Cash A/c	30,000		By Balance b/d	60,000
	To Purchase Return A/c	12,000		By Bills Payable (dishonoured)	8,000
	To Bills Payable (Accepted)	27,000		By Purchase (Credit) (Bal. figure)	37,000
	To Balance c/d	36,000
		1,05,000			1,05,000

Q.26 From the following calculate the amount of bills accepted during the year.

Particulars
Bills payable as on Apr 01, 2016	1,80,000
Bills payable as on March 31, 2017	2,20,000
Bills payable dishonoured during the year	28,000
Bills payable honoured during the year	50,000

Ans.

Bills Payable Account
Dt.	Particulars		Dt.	Particulars
			2016
	To Creditors		Apr 1	By Balance b/d	1,80,000
	(Bills Payable Dishonoured)	28,000		By Creditors
	To Cash Bank			(Bills Payable)	1,18,000
	(Bills Payable paid)	50,000		(Bal. Figure)
	To Balance c/d	2,20,000
		2,98,000			2,98,000

Bills accepted during the year is 1,18,000.

Q.27 Find out the amount of bills matured during the year on the basis of information given below:

Particulars
Bills payable dishonoured	37,000
Closing balance of bills payable	85,000
Opening balance of Bills payable	70,000
Bills payable accepted	90,000
Cheque dishonoured	23,000

Ans.

Bills Payable Account
Dt.	Particulars		Dt.	Particulars
	To Creditors (Bills Dishonoured)	37,000		By Balance b/d	70,000
	To Balance c/d	85,000		By Creditors (Bills Payable)	90,000
	To Cash/Bank (Bal. figure)	38,000
		1,60,000			1,60,000

The amount of bills matured during the year is 38,000.

Q.28 Prepare the bills payable account from the following and find out missing figure if any:

Particulars
Bills accepted	1,05,000
Discount received	17,000
Purchases returns	9,000
Return inwards	12,000
Cash paid to accounts payable	50,000
Bills receivable endorsed to creditor	45,000
Bills dishonoured	17,000
Bad debts	14,000
Balance of accounts payable (Closing)	85,000
Credit purchases	2,15,000

Ans.

Bills Payable Account
Dt.	Particulars		Dt.	Particulars
	To Creditors (Bills Dishonored)	17,000		By Creditors (Acceptance)	1,05,000
	To Cash/ Bank (Bal. figure)	88,000
		1,05,000			1,05,000

Creditors Account
Dt.	Particulars		Dt.	Particulars
	To Discount Received	17,000		By Purchases (Credit)	2,15,000
	To purchase Return	9,000		By Bills Payable (Dishonored)	17,000
	To Cash A/c	50,000		By Balance b/d (Bal. figure)	79,000
	To Bills Receivable	45,000
	To Bills Payable (Acceptance)	1,05,000
	To Balance c/d	85,000
		3,11,000			3,11,000

Opening Balance of creditors is 79,000

Q.29 Calculate the amount of bills receivable during the year.

Particulars
Opening balance of bills receivable	75,000
Bills dishonoured	25,000
Bills collected (honoured)	1,30,000
Bills receivable endorsed to creditors	15,000
Closing balance of bills receivable	65,000

Ans.

Bills Receivable Account
Dt.	Particulars		Dt.	Particulars
	To Balance b/d	75,000		By Debtors (Bill dishonoured)	25,000
	To Debtors (Bills Receivable Acceptance) b/f	1.60,000		By Cash/Bank (Bills honoured)	1,30,000
				By Bills Endorsed	15,000
				By Balance c/d	65,000
		2,35,000			2,35,000

Bills receivable received from debtors is 1,60,000.

Q.30 Calculate the amount of bills receivable dishonoured from the following information:

Particulars
Opening balance of bills receivable	1,20,000
Bills collected (honoured)	1,85,000
Bills receivable endorsed	22,800
Closing balance of bills receivable	50,700
Bills receivable received	1,50,000

Ans.

Bills Receivable Account
Dt.	Particulars		Dt.	Particulars
	To Balance b/d	1,20,000		By Cash/Bank (Bills honoured)	1,85,000
	To Debtors (Bills Received)	1,50,000		By Bills Endorsed (Creditors)	22,800
				By Debtors (Bill dishonored) b/f	11,500
				By Balance c/d	50,700
		2,70,000			2,70,000

The amount of Bills Receivable dishonoured is 11,500.

Q.31 From the details given below. Find out the credit sales and total sales.

Particulars
Opening debtors	45,000
Closing debtors	56,000
Discount allowed	2,500
Sales returns	8,500
Irrecoverable amount	4,000
Bills receivable received	12,000
Bills receivable dishonoured	3,000
Cheque dishonoured	7,700
Cash sales	80,000
Cash received from debtors	2,30,000
Cheque received from debtors	25,000

Ans.

Debtor’s Account
Dt.	Particulars		Dt.	Particulars
	To Balance b/d	45,000		By Discount Allowed	2,500
	To Bills Receivable (dishonoured)	3,000		By Sales Return	8,500
	To Bank (Cheque dishonoured)	7,700		By Bad debts	4,000
	To Sales (b/f)	2,82,300		By Bills Receivable	12,000
				By Cash	2,30,000
				By Bank (Cheque Received)	25,000
				By Balance c/d	56,000
		3,38,000			3,38,000

Total Sales = Cash Sales + Credit Sales

Total Sales = 80,000 + 2,82,300 = 3,62,300

Q.32 From the following information, prepare the bills receivable account and total debtors account for the year ended March 31, 2017.

Particulars
Opening balance of debtors	1,80,000
Opening balance of bills receivable	55,000
Cash sales made during the year	95,000
Credit sales made during the year	14,50,000
Return inwards	78,000
Cash received from debtors	10,25,000
Discount allowed to debtors	55,000
Bills receivable endorsed to creditors	60,000
Cash received (bills matured)	80,500
Irrecoverable amount	10,000
Closing balance of bills receivable on March 31, 2017	75,500

Ans.

Debtor’s Account
Dt.	Particulars		Dt.	Particulars
	To Balance b/d	1,80,000		By Return Inwards	78,000
	To Sales (Credit)	14,50,000		By Discount allowed	55,000
				By Cash	10,25,000
				By Bad debts	10,000
				By Bills Receivable (Acceptance received)	1,61,000
				By Balance c/d (Bal. figure)	3,01,000
		16,30,000			16,30,000

Bills Receivable Account
Dt.	Particulars		Dt.	Particulars
	To Balance b/d	55,000		By Cash/Bank	80,500
	To Debtors (Acceptance received) b/f	1,61,000		By Creditors (Endorsed)	60,000
				By Balance c/d	75,500
		2,16,000			2,16,000

Q.33 Prepare the suitable accounts and find out the missing figure if any:

Particulars
Opening balance of debtors	14,00,000
Opening balance of bills receivable	7,00,000
Closing balance of bills receivable	3,50,000
Cheque dishonoured	27,000
Cash received from debtors	10,75,000
Cheque received and deposited in the bank	8,25,000
Discount allowed	37,500
Irrecoverable amount	17,500
Returns inwards	28,000
Bills receivable received from customers	1,05,000
Bills receivable matured	2,80,000
Bills discounted	65,000
Bills endorsed to creditors	70,000

Ans.

Debtor’s Account
Dt.	Particulars		Dt.	Particulars
	To Balance b/d	14,00,000		By Cash	10,75,000
	To Bank (Cheque dishonoured)	27,000		By Bank (Cheque)	8,25,000
	To Bills Receivable (dishonoured)	40,000		By Bad debts	17,500
	To Sales (Credit) b/f	6,21,000		By Return Inwards	28,000
				By Discount allowed	37,500
				By Bills receivable	1,05,000
		20,88,000			20,88,000

Bills Receivable Account
Dt.	Particulars		Dt.	Particulars
	To Balance b/d	7,00,000		By Cash (B/R matured)	2,80,000
	To Debtors (Bills Receivable)	1,05,000		By Bank (Bill endorsed)	65,000
				By Creditors (endorsed)	70,000
				By Debtors (dishonoured) b/f	40,000
				By Balance c/d	3,50,000
		8,05,000			8,05,000

Note: As per solution, the missing figure in the bills receivable account is B/R dishonoured of 40,000. The credit sales is 6,21,000, however, the NCERT book shows a credit sales 5,16,000.

Q.34 Mrs. Bhavana keeps her books by Single Entry System. You are required to prepare final accounts of her business for the year ended March 31, 2017. Her records relating to cash receipts and cash payments for the above period showed the following particulars:

Dr. Summary of Cash Cr.
Receipts		Payments
Opening balance of cash	12,000	Paid to creditors	53,000
Further capital	20,000	Business expenses	12,000
Received from debtors	1,20,000	Wages paid	30,000
		Bhavana’s drawings	15,000
		Balance at bank on Mar 31, 2017	35,000
		Cash in hand	7,000
	1,52,000		1,52,000

The following information is also available:

Particulars	01/04/2016	31/03/2017
Debtors	55,000	85,000
Creditors	22,000	29,000
Stock	35,000	70,000
Plant	10,00,000	1,00,000
Machinery	50,000	50,000
Land & Buildings	2,50,000	2,50,000
Investment	20,000	20,000

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%.

Ans.

Debtor’s Account
Dt.	Particulars		Dt.	Particulars
2016			2017
Apr 1	To Balance b/d	55,000		By Cash A/c	1,20,000
	To Sales (Credit)	1,50,000	Mar 31	By Balance b/d	85,000
		2,05,000			2,05,000

Creditor’s Account
Dt.	Particulars		Dt.	Particulars
2017			2016
	To Cash A/c	53,000	Apr 1	By Balance b/d	22,000
Mar 31	To Balance c/d	29,000		By Purchase (Credit) b/f	60,000
		82,000			82,000

Statement of Affairs As on 31st March, 2017
Liabilities		Assets
Creditors	22,000	Debtors	55,000
Capital at beginning	5,00,000	Stock	35,000
(Bal. Figure)		Plant	1,00,000
		Machinery	50,000
		Land & Building	2,50,000
		Investment	20,000
		Cash	12,000
	5,22,000		5,22,000

Trading & Profit & Loss Account As on 31st March, 2017
Particulars			Particulars
To Opening Stock		35,000	By Sales	1,50,000
To purchases		60,000	By Closing Stock	70,000
To Wages		30,000
To Gross Profit c/d (Bal. figure)		95,000
		2,20,000		2,20,000
To Business Expenses		12,000	By Gross Profit b/d	95,000
To Provision for Doubtful Debts		4,250
To Depreciation
On Plant	10,000
On Building	25,000
On Machinery	2,500	37,500
To Net Profit (b/f)		41,250
		95,000		95,000

Balance Sheet As on 31st March, 2017
Liabilities			Assets
Capital	5,00,000		Cash in Hand		7,000
(+) Net profit	41,250		Cash at Bank		35,000
	5,41,250		Investment		20,000
(+) Further Capital	20,000		Debtors	85,000
	5,61,250		(-) Provision@5%	4,250	80,750
(-)Drawings	15,000	5,46,250	Plant	1,00,000
Creditors		29,000	(-) Dep. @10%	10,000	90,000
			Machinery	50,000
			(-) Dep @5%	2,500	47,500
			Land & Building	2,50,000
			(-) Dep. @10%	25,000	2,25,000
			Closing Stock		70,000
		5,75,250			5,75,250

Q.35 From the following information ascertain the opening balance of sundry debtors and closing balance of sundry creditors:

Particulars
Opening stock	30,000
Closing stock	25,000
Opening creditors	50,000
Closing debtors	75,000
Discount allowed by creditors	1,500
Discount allowed to customers	2,500
Cash paid to creditors	1,35,000
Bills payable accepted during the period	30,000
Bills receivable received during the period	75,000
Cash received from customers	2,20,000
Bills receivable dishonored	3,500
Purchases	2,95,000

The rate of gross profit is 25% on selling price and out of the total sales 85,000 was for cash sales.

Ans.

Debtor’s Account
Dt.	Particulars		Dt.	Particulars
	To Balance b/d	54,000		By Discount Allowed	2,500
	To Bills Receivable (dishonoured)	3,500		By Bills Receivable (Received)	75,000
	To Sales Credit	3,15,000		By Cash	2,20,000
				By Balance c/d	75,000
		3,72,500			3,72,500

Creditor’s Account
Dt.	Particulars		Dt.	Particulars
	To Discount Received	1,500		By Balance b/d	50,000
	To Cash A/c	1,35,000		By Purchases (Credit)	2,95,000
	To Bills Receivable (Acceptance)	30,000
	To Balance c/d (Bal. figure)	1,78,500
		3,45,000			3,45,000

Working Note:

Computation of Credit Sales:

Sales = Cost of goods sold + Gross Profit

Cost of goods sold = Opening stock + Purchases – Closing stock

= 30,000 + 2,95,000 – 25,000

= 3,00,000

When the cost of goods sold is 3,00,000.

Sales will be = 3,00,000 + 25% Gross profit

$\begin{array}{l}\text{Gross profit is calculated on sales hence to calculate it}\\ \text{on cost of goods sold, the formula will be:}\\ \text{= Cost of goods sold ×}\frac{\text{25}}{\text{100}\text{–}\text{25}}\\ \text{= 3,00,000 ×}\frac{\text{25}}{\text{75}}\\ \text{= 1,00,000}\\ \text{Total Sales = 3,00,000 + 1,00,000}\\ \text{= 4,00,000}\end{array}$

As we know that cash sales is 85,000. So credit sales will be: = 4,00,000 – 85,000 = 3,15,000