Chapter 9
Accounts from Incomplete Records
Question 1
Mr. Y keeps his books under single entry system. On 31 st March, 2006 his Balance Sheet was as
follows:
Liabilities
Rs. Assets
Rs.
Capital of Mr. Y
4,50,000 Fixed assets
2,25,000
Creditors
8,70,000 Stock
9,15,000
Bills payable
1,87,500 Debtors
2,22,000
Expenses outstanding
67,500 Bills receivable
Prepaid insurance
Cash / Bank balance
15,75,000
(i)
90,000
3,000
1,20,000
15,75,000
Following are the summary of cash and bank transactions for the year ended 31 st March, 2007:
Rs.
Cash sales
Collection from debtors
Payments to creditors
1,10,70,000
22,65,000
1,12,60,500
Paid for bills payable
12,22,500
Sundry expenses paid
9,31,050
Drawings for domestic expenses by Mr. Y
3,60,000
Cash and bank balance as on 31.3.2007
1,90,950
(ii) Following further details are furnished:
Gross profit on sales @ 10%
Bills receivable from debtors during the year
6,52,500
Discount allowed to debtors
54,000
Discount received from creditors
42,000
Bills receivable endorsed to creditors
22,500
Annual fire insurance premium paid
(This is paid on 1st August every year)
Depreciate fixed assets @ 10%
9,000
(iii) Balances as on 31.3.2007 are given below:
Rs.
Stock in hand
9,75,000
Debtors
2,28,000
Bills receivable
2,10,000
Bills payable
2,10,000
Outstanding expenses
7,500
Prepare Trading, Profit and Loss Account for the year ended 31 st March, 2007 and Balance Sheet
on that date.
(16 Marks) (May, 2007)
Answer
Trading and Profit and Loss Account of Mr. Y for the year 31.3.2007
Rs.
To
Opening stock
To
Purchases (W.N.5)
To
Gross profit
Rs.
9,15,000 By
1,27,02,750
Sales: Cash
1,10,70,000
Credit (W.N.2)
29,77,500
14,04,750 By
Closing stock
1,40,47,500
9,75,000
1,50,22,500
1,50,22,500
To
Expenses (W.N.6)
8,71,050 By
To
Discount allowed
54,000 By
To
Depreciation
22,500
To
Net profit
Gross profit
14,04,750
Discount received
42,000
4,99,200
14,46,750
14,46,750
Balance Sheet of Mr. Y
as on 31st March, 2007
Liabilities
Rs. Assets
Fixed assets
Capital
4,50,000
Add: Net profit
4,99,200
Less: Depreciation
Stock
9,49,200
Rs.
2,25,000
22,500
2,02,500
9,75,000
Less: Drawings
3,60,000
5,89,200 Debtors
2,28,000
Bills payable
2,10,000 Bills receivable
2,10,000
Creditors
Outstanding expenses
10,02,750 Prepaid insurance
7,500 Cash on hand/bank
18,09,450
3,000
1,90,950
18,09,450
Working Notes:
1.
Bills Receivable Account
To
Balance b/f
To
Debtors
90,000 By
Cash (Balancing figure)
6,52,500 By
Creditors (Bills endorsed)
By
Balance c/f
7,42,500
2.
5,10,000
22,500
2,10,000
7,42,500
Debtors Account
Rs.
To
Balance b/f
To
Credit Sales
(Balancing figure)
Rs.
2,22,000 By
29,77,500 By
Cash/Bank
Discount allowed
54,000
By
Bills receivable
6,52,500
By
Balance c/f
2,28,000
31,99,500
3.
22,65,000
31,99,500
Bills Payable Account
To
Bank
12,22,500 By
To
Balance c/f
2,10,000 By
Balance b/f
Creditor (Balancing figure)
14,32,500
4.
1,87,500
12,45,000
14,32,500
Creditors Account
To
Cash/Bank
1,12,60,500 By
Balance b/f
8,70,000
To
Discount
42,000 By
Purchases
1,27,02,750
To
B/R endorsed
22,500
To
B/P
12,45,000
To
Balance c/f
(Balancing figure)
10,02,750
1,35,72,750
5.
1,35,72,750
Stock Account
To
Balance b/f
To
Purchases
(Balancing figure)
9,15,000 By
1,27,02,750 By
Cost of goods sold
(Rs.1,40,47,500 x 90%)
Balance c/d
1,36,17,750
6.
Expenses for the year ended
31st
1,26,42,750
9,75,000
1,36,17,750
March, 2007
Rs.
Expenses paid during the year
Add:
Outstanding expenses as on 31.3.2007
9,31,050
7,500
9,38,550
Less: Outstanding expenses as on 1.4.2006
67,500
8,71,050
Add:
Prepaid Insurance as on 1.4.2006
3,000
8,74,050
Less: Prepaid Insurance as on 31.3.2007 (9,000 x 4/12)
3,000
Expenses shown in the profit and loss account for the year ended 31.3.2007
8,71,050
Question 2
The closing capital of Mr. A on 31.3.2007 was Rs. 1,50,000. On 1.4.2006 his capital was Rs. 60,000.
During the year he had drawn Rs. 40,000 for domestic expenses. He introduced Rs. 25,000 as additional
capital in February, 2007. Find out his net profit for the year.
(2 Marks) (November, 2007)
Answer
Statement showing calculation of profit for the year 31.3.2007
Rs.
Capital as on 31.3.2007
1,50,000
Add: Drawings during the year
40,000
1,90,000
Less: Additional capital introduced in February 2002
(25,000)
1,65,000
Less: Capital as on 1.4.2006
(60,000)
Net profit for the year
Question 3
1,05,000
In a concern, the opening provision for doubtful debts is Rs.51,000. During the year a sum of
Rs.10,000 was written off as bad debt. The closing balance of sundry debtors amounts to Rs.6,30,000.
It was decided that 10% of the debtors is to be maintained as provision. Calculate the closing balance
towards provision for doubtful debts and pass journal entry for giving effect to the provision maintained.
(2 Marks) (May, 2008)
Answer
(iii)
Closing balance of Sundry Debtors
Rs.6,30,000
Closing provision for doubtful debts to be maintained @ 10%
Rs.63,000
Rs.51,000
Rs.12,000
Less:
Opening Provision for doubtful debts
Additional provision to be maintained
Journal Entry
Profit and Loss A/c
Dr.
To Provision for doubtful debts
(Being additional provision on doubtful debts maintained @ 10%)
12,000
12,000
Question 4
A company sold 25% of the goods on cash basis and the balance on credit basis. Debtors are allowed
2 months credit and their balance as on 31.3.2008 is Rs.1,40,000. Assume that the sale is uniform
through out the year. Calculate the total sales of the company for the year ended 31.3.2008.
(2 Marks) (May, 2008)
Answer
(ii)
Debtors as on 31.3.2008
Rs.1,40,000
Credit period allowed
2 months
i.e. Debtors as on 31.3.2008 is standing for credit sales of February and March 2008
Credit sales per month
Credit sales for the year 2007-2008
Add: Cash sales 8,40,000
25
75
Rs.1,40,000/2
Rs.70,000
Rs.70,000 12
Rs.8,40,000
Rs.2,80,000
Total sales of the company for the year ended
31.3.2008
(iii) Closing balance of Sundry Debtors
Rs.11,20,000
=
Rs.6,30,000
Closing provision for doubtful debts to be =
maintained @ 10%
Rs.63,000
Less:
Opening Provision for doubtful debts
Additional provision to be maintained
Rs.51,000
Rs.12,000
Journal Entry
Profit and Loss A/c
Dr.
12,000
To Provision for doubtful debts
12,000
(Being additional provision on doubtful debts maintained @ 10%)
Question 5
The books of Mr. Z showed the following information:
1.1.2007 (Rs.)
31.12.2007 (Rs.)
Bank balance
---
50,000
Debtors
---
87,500
Creditors
---
46,000
Stock
Fixed assets
50,000
62,500
7,500
9,000
The following are the details of the bank transactions:
Rs.
Receipt from customers
3,40,000
Payments to creditors
2,80,000
Capital brought in
5,000
Sale of fixed assets
1,750
Expenses paid
49,250
Drawings
25,000
Purchase of fixed assets
5,000
Other information:
(i)
Cost of goods sold
Rs.2,60,000
(ii)
Gross profit 25% on cost of goods sold
(iii)
Book value of assets sold
Rs.2,500
Prepare Trading, Profit and Loss account for the year ended 31.12.2007 and Balance Sheet as at
31.12.2007.
(8 Marks) (November, 2008)
Answer
Trading and Profit & Loss Account
for the year ended 31.12.2007
Dr.
Cr.
Rs.
To
Opening stock
To
Purchases (W.N.7)
To
Gross profit (W.N.6)
Rs.
50,000 By
Sales (W.N.8)
3,25,000
2,72,500 By
Closing stock
62,500
65,000
3,87,500
To
Expenses
To
Loss on sale of fixed asset
To
Depreciation on fixed assets
To
Net Profit
49,250 By
3,87,500
Gross profit
65,000
750
1,000
14,000
65,000
65,000
Balance Sheet as at 31.12.2007
Liabilities
Capital as on 1.1.2007
Add:
Net profit
Additional capital
Less:
Drawings
Rs.
Rs.. Assets
1,69,000
Fixed Assets
14,000
Rs.
9,000
Debtors
87,500
5,000
Stock
62,500
1,88,000
Bank
50,000
25,000
Creditors
1,63,000
46,000
2,09,000
2,09,000
Working Notes:
1.
Balance Sheet as at 1.1.2007
Liabilities
Capital (Bal. Fig.)
Creditors
Rs. Assets
1,69,000 Fixed Assets
53,500 Debtors
7,500
1,02,500
Stock
50,000
Bank Balance
62,500
2,22,500
2.
Rs.
2,22,500
Bank account
Dr.
Cr.
Rs.
To
Balance b/d (Bal. Fig.)
To
Debtors
To
To
Rs.
62,500 By
Creditors
2,80,000
3,40,000 By
Expenses
49,250
Capital
5,000 By
Drawings
25,000
Fixed Assets
1,750 By
Fixed Assets (purchased)
By
Balance c/d
4,09,250
3.
5,000
50,000
4,09,250
Debtors account
Dr.
Cr.
Rs.
Rs.
To
Balance b/d (Bal. Fig.)
1,02,500 By
Bank
To
Sales (W.N.8)
3,25,000 By
Balance c/d
4,27,500
3,40,000
87,500
4,27,500
4.
Creditors account
Dr.
Cr.
Rs.
To
Bank
To
Balance c/d
Rs.
2,80,000 By
46,000 By
Balance b/d (Bal. Fig.)
Purchases (W.N.7)
3,26,000
5.
53,500
2,72,500
3,26,000
Fixed Assets account
Dr.
Cr.
Rs.
Rs.
To
Balance b/d
7,500 By
Bank (Sale)
To
Bank
5,000 By
Profit and Loss A/c (loss on sale)
1,750
750
By
Depreciation (Bal. Fig.)
1,000
By
Balance c/d
9,000
12,500
12,500
6.
Gross Profit = Rs.2,60,000 x 25% = Rs. 65,000.
7.
Cost of goods sold = Opening stock + Purchases Closing stock
Rs.2,60,000 = Rs.50,000 + Purchases - Rs.62,500
Purchases = Rs. 2,72,500.
8.
Sales = Cost of goods sold + gross profit
= Rs.2,60,000 + Rs.65,000
= Rs.3,25,000.
Question 6
Following is the Balance Sheet of Mr. Ram, a small trader, as on 31 st March, 2008:
Liabilities
Rs.
Creditors
1,00,000
Cash
10,000
Capital
4,00,000
Bank
20,000
Stock
80,000
5,00,000
Assets
Rs.
Debtors
1,00,000
Fixed Assets
2,90,000
5,00,000
A fire occurred on the night of 31 st March, 2009, destroying the accounting records as well as the
closing cash of the trader. However, the following information was available:
(i)
Debtors and creditors as on 31 st March, 2009 showed an increase of 20% as compared to
31st March, 2008.
(ii) Credit period:
Debtors
: 1 month
Creditors
: 2 months
(iii) Stock was maintained at the same level throughout the year.
(iv) Cash sales constituted at 20% of the total sales.
(v) All purchases were on credit basis only.
(vi) Current ratio on 31 st March, 2009 was exactly 2.
(vii) Total expenses excluding depreciation for the year amounted to Rs.5,00,000.
(viii) Depreciation was provided @ 10% on the closing book value of fixed assets.
(ix) Bank and cash transactions for the financial year 2008-09 were as under:
(a) Payment to creditors included Rs.1,00,000 by cash.
(b) Received from debtors included Rs.11,80,000 by way of cheques.
(c) Cash deposited into the Bank Rs.2,40,000.
(d) Personal drawings from Bank Rs.1,00,000.
(e) Fixed assets purchased and paid by cheques Rs.4,50,000.
(f)
Assume that cash destroyed by fire is written off in the Profit and Loss account.
You are required to prepare:
(i)
Trading and Profit and Loss account of Shri Ram for the year ended 31 st March, 2009.
(ii) A Balance Sheet as at that date.
(8 Marks)(June,2009)
Answer
Trading and Profit and Loss Account
for the year ended 31.3.2009
Particulars
To
Opening stock
To
Purchases (W.N.1)
To
Gross profit
Rs.
80,000
Particulars
By
Sales (W.N.2)
7,20,000
Cash
10,80,000
Credit
14,40,000
By
Expenses
5,00,000
To
Loss of cash by fire
20,000
To
Depreciation
74,000
To
Net profit transfered to
Capital A/c
3,60,000
Closing stock
18,80,000
To
Rs.
18,00,000
80,000
18,80,000
By
Gross profit
10,80,000
4,86,000
10,80,000
10,80,000
Balance Sheet as on 31.3.2009
Liabilities
Rs.
Rs.
Creditors
1,20,000
Capital
4,00,000
Add: Net profit
during the year
4,86,000
Rs.
Rs.
Cash at bank (W.N.3)
40,000
Debtors
1,20,000
Stock
8,86,000
Less: Drawings
Assets
1,00,000
7,86,000
80,000
Fixed assets
2,90,000
During the year
4,50,000
7,40,000
Less: Depreciation
74,000
9,06,000
6,66,000
9,06,000
Working Notes:
(1)
Calculation of creditors as on 31.3.2009 and credit purchase for 2008-2009
Creditors
Previous year creditors + 20% increase
=
=
1,00,000 + 20,000
Rs.1,20,000
Credit purchases =
Creditors at the end
=
(2)
1,20,000
12
2
12
2
= Rs.7,20,000
Calculation of Debtors as 31.3.2009 and Cash and Credit Sales for 2008-2009
Debtors on 31.3.2009 = Debtors on 31.3.2008 + 20% Increase
= 1,00,000 + 20,000
= Rs.1,20,000
Credit sales for 2008-2009 = Debtors at the end (i.e. one month credit) x 12
= Rs. 1,20,000 x 12 = Rs.14,40,000
Total sales = Rs.14,40,000
Cash sales
(3)
100
= Rs.18,00,000
80
Total sales Credit sales
=
Rs. 18,00,000 Rs.14,40,000
Rs. 3,60,000
Cash and Bank Balance as on 31.3.2009
Current ratio = 2
Current ratio =
Current assets
2
=
Current liabilities
1
Current assets = Current liabilities x 2
Current assets = 1,20,000 x 2 = 2,40,000
Cash and bank balance = Current assets (Debtors + Stock)
Cash and bank balance = 2,40,000 (1,20,000 + 80,000)
Cash and bank balance = 2,40,000 2,00,000 = Rs.40,000
Cash Account
(4)
Rs.
To
Balance b/d
To
To
Rs.
10,000
By
Creditors A/c
1,00,000
Sales A/c
3,60,000
By
Bank A/c
2,40,000
Debtors A/c (W.N.6)
2,40,000
By
Expenses A/c
(5,00,000 2,50,000)
2,50,000
By
Loss by fire (Bal.fig.)
20,000
6,10,000
6,10,000
Bank Account
(5)
Rs.
To
To
Balance b/d
Debtors A/c
To
Cash A/c
Rs.
20,000
11,80,000
By
By
Creditors A/c (W.N.7)
Fixed assets A/c
6,00,000
4,50,000
2,40,000
By
Drawings
1,00,000
By
Expenses (Bal. fig.)
2,50,000
By
Balance c/d
14,40,000
Debtors Account
Rs.
(6)
To
To
Balance b/d
Sales
1,00,000
14,40,000
Rs.
By Bank
By Cash (Bal. Fig.)
11,80,000
2,40,000
By Balance c/d
1,20,0001
15,40,000
15,40,000
Creditors Account
(7)
Rs.
Rs.
To
Cash A/c
1,00,000
By
Balance b/d
1,00,000
To
Bank (Bal. fig.)
6,00,000
By
Purchases A/c
7,20,000
Balance c/d
1,20,0002
To
1
40,000
14,40,000
Debtors on 31.3.2009 = Debtors on 31.3.2008 x 120% i.e. 1,00,000 x 120% = Rs. 1,20,000
Creditors on 31.3.2009 = Creditors on 31.3.2008 x 120% i.e. 1,00,000 x 120% = Rs. 1,20,000
8,20,000
8,20,000
Question 7
Find out the profit of Mr. A from the following information:
Capital at the beginning of the year
Rs.20,00,000
Drawings made by Mr. A
Rs.2,00,000
Capital at the end of the year
Rs.25,00,000
Additional capital introduced during the year
Rs.1,00,000
(2 Marks) (November, 2009)
Answer
Statement showing profit earned by Mr. A during the year
Rs.
Capital at the end of the year
Add:
25,00,000
Drawings
2,00,000
27,00,000
Less:
Additional capital introduced during the year
(1,00,000)
26,00,000
Less:
Capital at the beginning of the year
(20,00,000)
Profit earned during the year
Question 8
6,00,000
A trader purchased goods for Rs.1,70,000. The opening stock of inventory prior to the said purchase
was Rs.30,000. His sales was Rs.2,10,000. Find out the closing stock of inventory if the Gross profit
margin is 25% on cost.
(2 Marks) (November, 2009)
Answer
Calculation of closing stock:
Cost of goods sold
Closing stock
Sales Gross Profit
Rs.2,10,000 (Rs. 2,10,000
Rs.1,68,000
Opening Stock + Purchases Cost of goods sold
Rs.30,000 + Rs.1,70,000 Rs.1,68,000
Rs.32,000
25
)
125
