Book Keeping Accountancy Solutions 2014 Solutions for Class 12 Commerce Accountancy Chapter 8 Single Entry System are provided here with simple step-by-step explanations. These solutions for Single Entry System are extremely popular among class 12 Commerce students for Accountancy Single Entry System Solutions come handy for quickly completing your homework and preparing for exams. All questions and answers from the Book Keeping Accountancy Solutions 2014 Book of class 12 Commerce Accountancy Chapter 8 are provided here for you for free. You will also love the ad-free experience on Meritnation’s Book Keeping Accountancy Solutions 2014 Solutions. All Book Keeping Accountancy Solutions 2014 Solutions for class 12 Commerce Accountancy are prepared by experts and are 100% accurate.
Page No 258:
Question 1.A1:
Objective type questions.
Answer in one sentence only.
What is single entry system?
Answer:
Single entry system is a system of book keeping in which incomplete records are maintained. Under this system, records of only cash and personal accounts are maintained. There are no defined set of rules to be followed. It is particularly suitable for small businesses with a limited number of transactions. Accounts maintained under this system are known as incomplete double-entry records.
Page No 258:
Question 1.A2:
Objective type questions.
Answer in one sentence only.
What is statement of affairs?
Answer:
A statement of affairs is basically a statement of capital, showing assets and liabilities as on the date of its preparation. There are two such statements, i.e. Opening Statement of Affairs (to ascertain the opening capital) and Closing Statement of Affairs (to ascertain the closing capital).
Page No 258:
Question 1.A3:
Objective type questions.
Answer in one sentence only.
In which method statement of affairs is prepared?
Answer:
Under single-entry system, real accounts are not recorded in the books; therefore, it is not possible to prepare the Balance Sheet of the business. Hence, under this system, a statement of affairs is prepared.
Page No 258:
Question 1.A4:
Objective type questions.
Answer in one sentence only.
Which type of transactions are recorded in Single Entry System?
Answer:
Only transactions related to cash and personal accounts are maintained and recorded under this system of accounting. Transactions related to real and nominal accounts are ignored.
Page No 258:
Question 1.A5:
Objective type questions.
Answer in one sentence only.
Can a trial balance be prepared under Single Entry System?
Answer:
As incomplete records are maintained under single-entry system, only few transactions are recorded. Only cash and personal accounts are maintained, whereas real and nominal accounts are ignored. Also, no set rules are followed to record the transactions. Hence, a Trial Balance cannot be prepared.
Page No 258:
Question 1.A6:
Objective type questions.
Answer in one sentence only.
Which type of accounts are maintained under Single Entry System?
Answer:
Under single-entry system, only a few transactions are recorded. Hence, only personal and cash accounts are maintained and no set rules are followed.
Page No 258:
Question 1.A7:
Objective type questions.
Answer in one sentence only.
Why is it difficult to ascertain the correct profit or loss under Single Entry system?
Answer:
As the records maintained under single-entry system are incomplete, detailed information about expenses is not available. Hence, it becomes difficult to ascertain the true profits earned/losses incurred during an accounting period.
Page No 258:
Question 1.A8:
Objective type questions.
Answer in one sentence only.
How is the closing capital calculated under Single Entry System?
Answer:
Under single-entry system, closing capital is based on the estimated values of assets and liabilities at the end of the year. It is calculated as the difference between closing liabilities and closing assets.
Page No 258:
Question 1.A9:
Objective type questions.
Answer in one sentence only.
Which Statement is prepared under the Single Entry System to ascertain profit?
Answer:
Statement of Profit or Loss is prepared to calculate the profit under single-entry system. The profit is calculated as follows:
Capital at the end
Add: Drawings made during the year
Less: Additional Capital introduced during the year
Less: Capital in the beginning
Profit or loss for the year
Page No 258:
Question 1.A10:
Objective type questions.
Answer in one sentence only.
Which types of accounts are normally not kept under Single Entry System?
Answer:
Real and nominal accounts are not maintained under single-entry system. Only cash and personal accounts are recorded under this system. Single-entry is an incomplete system of recording transactions and is considered to be suitable for small organisations. Therefore, only entries related to personal and cash accounts are recorded, while others are ignored.
Page No 258:
Question 1.B1:
Write the word / term / phrase which can substitute each of the following Statements.
A system of book-keeping in which both the aspects of transaction are recorded.
Answer:
Double entry system
Explanation: In contrast to single-entry system, under double-entry system, the dual aspect of each transaction is recorded. In other words, debit and credit aspects of nominal, real and personal accounts are recorded. Therefore, this system is considered more reliable and scientific.
Page No 258:
Question 1.B2:
Write the word / term / phrase which can substitute each of the following Statements.
An excess of assets over liabilities.
Answer:
Capital
Explanation: Excess of assets over liabilities is known as capital. Opening capital is calculated by deducting opening liabilities from opening assets and closing capital is calculated by deducting closing liabilities from closing assets.
Page No 258:
Question 1.B3:
Write the word / term / phrase which can substitute each of the following Statements.
A system of accounting which is not scientific.
Answer:
Single entry system
Explanation: Single-entry system is an incomplete and unscientific system of accounting. Only personal and cash accounts are maintained under it. This system is mostly suitable for small-scale businesses with limited number of transactions. Moreover, there are no set rules prescribed for recording transactions under this system.
Page No 258:
Question 1.B4:
Write the word / term / phrase which can substitute each of the following Statements.
Name the method in which only cash and personal transactions are recorded.
Answer:
Single entry system
Explanation: Under single-entry system, only cash and personal accounts are maintained, while real and nominal accounts are ignored. It is an incomplete and unscientific system, as incomplete accounts are maintained with no proper rules adopted for recording of transactions.
Page No 258:
Question 1.B5:
Write the word / term / phrase which can substitute each of the following Statements.
The method in which Trading Account, Profit and Loss Account and Balance Sheet can be prepared.
Answer:
Double entry system
Explanation: Under double-entry system, Trading Account, Profit & Loss Account and Balance Sheet form part of financial statements. Hence, both of these are prepared at the end of accounting period.
Page No 258:
Question 1.B6:
Write the word / term / phrase which can substitute each of the following Statements.
A statement similar to Balance Sheet.
Answer:
Statement of Affairs
Explanation: A statement of affairs shows various assets and liabilities of a business on a particular date. It can be prepared with both opening and closing balances. A statement prepared with the opening assets and liabilities is known as Opening Statement of Affairs (to ascertain opening capital). Similarly, a statement prepared with the closing assets and liabilities is known as Closing Statement of Affairs (to ascertain closing capital). It is similar to Balance Sheet prepared under double-entry system.
Page No 258:
Question 1.B7:
Write the word / term / phrase which can substitute each of the following Statements.
A statement similar to Balance Sheet prepared to ascertain the amount of closing capital.
Answer:
Closing Statement of Affairs
Explanation: The amount of closing capital is calculated by preparing a Closing Statement of Affairs by deducting the total closing liabilities from the total closing assets.
Page No 258:
Question 1.B8:
Write the word / term / phrase which can substitute each of the following Statements.
System of accounting normally suitable to small business organization.
Answer:
Single entry system
Explanation: Generally, small businesses lack the required experience in recording transactions in a scientific and systematic manner. Allocation of funds for maintenance of complete accounting records is difficult for them. So, it is desirable for them to maintain incomplete records and ascertain the profit or loss. This is known as single-entry system and is particularly suitable for small-scale business organisations that have small number of transactions.
Page No 258:
Question 1.B9:
Write the word / term / phrase which can substitute each of the following Statements.
The accounting method in which profit is calculated by comparing opening and closing statements of affairs.
Answer:
Net Worth Method
Explanation: Under single-entry system, profit or loss is calculated by comparing capital at two dates, i.e. opening capital and closing capital. The profit is calculated as closing capital less opening capital and also, the following adjustments are made:
a. Drawings: If drawings are made during the year, they should be added to the amount of closing capital.
b. Additional capital: If additional capital is introduced in the business during the year, it should be deducted from the amount of closing capital.
c. Interest on capital: If interest is provided on capital, it should be deducted from the amount of closing capital.
Page No 258:
Question 1.B10:
Write the word / term / phrase which can substitute each of the following Statements.
The system of accounting which is most scientific and reliable.
Answer:
Double entry system
Explanation: Under single-entry system, only cash and personal accounts are maintained. Dual aspect, i.e. double-entry system, is not followed. Hence, single-entry system is considered unscientific and incomplete. On the other hand, double-entry system is considered as a more scientific and complete system of accounting because dual aspect of a transaction (i.e. both debit and credit aspects of a transaction) is recorded. Transactions related to real, personal and nominal accounts are recorded. Hence, it is considered more reliable.
Page No 258:
Question 1.C1:
Select the most appropriate answer the alternatives given below and rewrite the Sentences.
When Closing Capital is greater than Opening Capital it denotes ___________
a) profit
b) loss
c) no profit, no loss
d) assets.
Answer:
When Closing Capital is greater than Opening Capital it denotes profit.
Explanation: The formula to calculate closing capital is 'Opening Capital + Profit'. Hence, when closing capital is greater than opening capital, it denotes profit. However, if the closing capital is less than the opening capital, it denotes loss.
Page No 258:
Question 1.C2:
Select the most appropriate answer the alternatives given below and rewrite the Sentences.
Generally incompleted records are maintained by _____________
a) trader
b) company
c) society
d) government
Answer:
Generally incompleted records are maintained by trader.
Explanation: Incomplete records, i.e. records based on the lines of single-entry system, are usually maintained by a trader. Incomplete records may be due to partial recording of transactions, as is the case with small shopkeepers such as grocers and vendors. Companies, societies and governments are required to maintain accounts based on double-entry system, owing to the size of their business.
Page No 258:
Question 1.C3:
Select the most appropriate answer the alternatives given below and rewrite the Sentences.
The capital in the beginning of the accounting year is ascertained by preparing_____________.
a) Receipts and Payment Account
b) Cash Account
c) Statement of Profit or loss
d) Opening Statement of Affairs
Answer:
The capital in the beginning of the accounting year is ascertained by preparing opening statement of affairs.
Explanation: For determining the opening capital, the statement of affairs is prepared on the opening date. The opening capital will be the balancing figure, which is calculated by deducting the total opening liabilities from the total opening assets.
Page No 258:
Question 1.C4:
Select the most appropriate answer the alternatives given below and rewrite the Sentences.
Under Single entry System only _______________.
a) Personal accounts and cash A/c are opened
b) Real accounts are opened
c) Nominal accounts are opened
d) Real and nominal accounts are opened,
Answer:
Under Single entry System only personal accounts and cash A/c are opened.
Explanation: Real and nominal accounts are not maintained under single-entry system. Only personal and cash accounts and the cash and credit transactions (related to personal accounts) are recorded under this system.
Page No 258:
Question 1.C5:
Select the most appropriate answer the alternatives given below and rewrite the Sentences.
The Capital balances are ascertained by preparing _______________.
a) Statement of affairs
b) Cash Account
c) Drawing account
d) Debtors Account
Answer:
The Capital balances are ascertained by preparing Statement of Affairs.
Explanation: It is a statement showing various assets and liabilities of the business on a particular date. It can be prepared with both opening and closing balances. A statement prepared with opening assets and liabilities is known as Opening Statement of Affairs (to ascertain the opening capital). Similarly, a statement prepared with closing assets and liabilities is known as Closing Statement of Affairs (to ascertain the closing capital).
Page No 258:
Question 1.C6:
Select the most appropriate answer the alternatives given below and rewrite the Sentences.
Further capital introduced during the year is _______________ from closing capital in order to find-out the correct profit.
a) added
b) deducted
c) divided
d) ignored.
Answer:
Further capital introduced during the year is deducted from closing capital in order to find out the correct profit.
Explanation: Under single-entry system, profit or loss is calculated by comparing capital at two dates, i.e. opening capital and closing capital (net worth method). The profit is calculated as closing capital less opening capital and also, the following adjustments are made:
a. Drawings: If drawings are made during the year, they should be added to the amount of closing capital.
b. Additional capital: If additional capital is introduced in the business during the year, it should be deducted from the amount of closing capital.
c. Interest on capital: If interest is provided on capital, it should be deducted from the amount of closing capital.
Page No 259:
Question 1.C7:
Select the most appropriate answer the alternatives given below and rewrite the Sentences.
In statement of profit or loss interest on Capital in shown as _____________.
a) addition
b) subtraction
c) ignored
d) multiplied.
Answer:
In statement of profit or loss interest on Capital in shown as subtraction.
Explanation: Under net worth method, if interest on capital is provided, then it is shown by way of deduction (or subtraction) from the closing capital.
Page No 259:
Question 1.C8:
Select the most appropriate answer the alternatives given below and rewrite the Sentences.
If Opening Capital is Rs 40,000, Closing Capital is 90,000 Rs, Withdrawals is Rs 5,000 and additional Capital brought in is Rs 10,000 Profit is Rs ______________.
a) 45,000
b) 55,000
c) 35,000
d) 75,000
Answer:
If Opening Capital is Rs 40,000, Closing Capital is Rs 90,000, Withdrawals is Rs 5,000 and additional Capital brought in is Rs 10,000 Profit is Rs 45,000.
Explanation: Closing Capital = Opening Capital + Profit – Withdrawals + Additional Capital Introduced
Putting the respective values, we get:
90,000 = 40,000 + profit – 5,000 + 10,000
Profit = 90,000 – 45000 = 45,000
Page No 259:
Question 1.C9:
Select the most appropriate answer the alternatives given below and rewrite the Sentences.
Under Single Entry System Opening Capital = Opening Assets Less _____________.
a) Closing Assets
b) Opening Liabilities
c) Opening Assets
d) Closing Liabilities
Answer:
Under Single Entry System Opening Capital = Opening Assets Less Opening Liabilities.
Explanation: Opening Capital is calculated by deducting the total opening liabilities from the total opening assets.
Page No 259:
Question 1.D1:
State True or False.
Statement of profit is just like Profit and Loss Account.
Answer:
False
Explanation: Statement of Profit is not like Profit and Loss Account. It is calculated as shown:
Capital at the end
Add: Drawings made during the year
Less: Additional Capital introduced during the year
Less: Capital in the beginning
Profit or loss for the year
Profit and Loss Account consists of expenses incurred and income earned during the accounting period, whereas Statement of Profit or Loss is prepared to calculate the profit earned or loss suffered (using Opening and Closing Capital).
Page No 259:
Question 1.D2:
State True or False.
Single Entry System is based on certain rules and principles.
Answer:
False
Explanation: No set rules are followed to record transactions under single-entry system. Only cash and personal accounts are maintained without any prescribed rules. Thus, it is also known as a system of incomplete records.
Page No 259:
Question 1.D3:
State True or False.
All transactions are recorded in Single Entry System.
Answer:
False
Explanation: Under this system, transactions related to only cash and personal accounts are recorded. However, transactions related to real and nominal accounts are ignored. So, in that sense, incomplete records are maintained.
Page No 259:
Question 1.D4:
State True or False.
Arithmetical accuracy can’t be checked in single entry.
Answer:
True
Explanation: Under single-entry system, it is difficult to prepare Trial Balance from incomplete records. As Trial Balance cannot be prepared, arithmetical accuracy cannot be assured.
Page No 259:
Question 1.D5:
State True or False.
Under Single Entry System it is not possible to prepare Trial Balance.
Answer:
True
Explanation: As incomplete records are maintained under this system, it is not possible to prepare a Trial Balance. Only transactions related to cash and personal accounts are recorded under single-entry system, while transactions related to real and nominal accounts are ignored. Hence, it is difficult to prepare a Trial Balance.
Page No 259:
Question 1.D6:
State True or False.
Only cash transactions and personal transactions are recorded in Single entry.
Answer:
True
Explanation: Only transactions related to cash and personal accounts are recorded under single-entry system. Real and nominal accounts are ignored. As accounts under single-entry are maintained by small businesses with limited number of transactions, incomplete records are maintained under this system.
Page No 259:
Question 1.D7:
State True or False.
Drawings made during the year decreases the profit under single entry system.
Answer:
False
Explanation: Under single-entry system, drawings made during the year are added to the capital at the end of the year in order to arrive at the profit figure. Hence, drawings made during the year increase the profit under this system.
Page No 259:
Question 1.D8:
State True or False.
Statement of profit shows financial position of business.
Answer:
False
Explanation: Under single-entry system, statement of profit shows the results of business activities. Instead, the financial position of a business is disclosed by preparing the statement of affairs.
Page No 259:
Question 1.D9:
State True or False.
Double Entry System is scientific method of maintaining books of accounts.
Answer:
True
Explanation: Double-entry system is a scientific system because the entries are recorded taking into account the dual aspect, i.e. the debit and credit aspects of each transaction. Also, under this system, transactions related to all the accounts (i.e. real, nominal and personal) are recorded. Hence, the accounts maintained under this system are complete and reliable.
Page No 259:
Question 1.D10:
State True or False.
Single Entry System is not useful for large business.
Answer:
True
Explanation: Single-entry system, i.e. a system of incomplete records, is usually followed by traders engaged in small businesses. It maintains records only of personal accounts and cash account. Moreover, the dual aspect of a transaction is ignored under this system. Therefore, it is not desirable to adopt this system for large business firms completing numerous transactions.
Page No 259:
Question 1:
PRACTICAL PROBLEMS
Mr. Mangesh is dealing in business. He maintains his accounting with Single Entry. The following are details of his business.
|
Particulars |
01-04-2012 |
31-03-2013 |
|
Land and Building |
40,000 |
50,000 |
|
Machinery |
30,000 |
40,000 |
|
Furniture |
10,000 |
10,000 |
|
Debtors |
20,000 |
40,000 |
|
Stock |
10,000 |
25,000 |
|
Cash Balance |
5,000 |
15,000 |
|
Bills Receivable |
5,000 |
5,000 |
|
Creditors |
25,000 |
25,000 |
|
Bank Overdraft |
5,000 |
—— |
|
Bank Balance |
—— |
10,000 |
Mr. Mangesh introduced Rs 10,000 as additional Capital. He spent Rs 45,000 for personal use Depreciate Land and Building by Rs 5,000. Provide 5% R.D.D. on Debtors.
Prepare: Opening Statement of affairs, Closing Statement of affairs and the statement of profit or loss.
Answer:
|
Statement of Affairs
as on April 01,2012
|
|||
|
Liabilities
|
Amount
(Rs)
|
Assets
|
Amount
(Rs)
|
|
Creditors
|
25,000
|
Cash in Hand
|
5,000
|
|
Bank Overdraft
|
5,000
|
Machinery
|
30,000
|
|
Capital (Balancing Figure)
|
90,000
|
Land and Building
|
40,000
|
|
|
|
Furniture
|
10,000
|
|
|
|
Debtors
|
20,000
|
|
|
|
Stock
|
10,000
|
|
|
|
Bills Receivable
|
5,000
|
|
|
|
Prepaid Expenses
|
|
|
|
1,20,000
|
|
1,20,000
|
|
|
|
|
|
|
Statement of Affairs
as on March 31,2013
|
|||
|
Liabilities
|
Amount
(Rs)
|
Assets
|
Amount
(Rs)
|
|
Creditors
|
25,000
|
Cash Balance
|
15,000
|
|
Capital (Balancing Figure)
|
1,70,000
|
Bank Balance
|
10,000
|
|
|
|
Machinery
|
40,000
|
|
|
|
Land and Building
|
50,000
|
|
|
|
Furniture
|
10,000
|
|
|
|
Debtors
|
40,000
|
|
|
|
Stock
|
25,000
|
|
|
|
Bills Receivable
|
5,000
|
|
|
|
Prepaid Expenses
|
|
|
|
1,95,000
|
|
1,95,000
|
|
|
|
|
|
|
Statement of Profit or Loss
for the year ended March 31,2013
|
|
|
Particulars
|
Amount
(Rs)
|
|
Capital at the end of the year
|
1,70,000
|
|
Add: Drawings made during the year
|
45,000
|
|
Less: Additional capital introduced during the year
|
(10,000)
|
|
Adjusted capital at the end of the year
|
2,05,000
|
|
Less: Capital in the beginning of the year
|
(90,000)
|
|
|
1,15,000
|
|
Less: Depreciation on Land and Building
|
(5,000)
|
|
Reserve for Doubtful Debts
|
(2,000)
|
|
Profit for the year
|
1,08,000
|
|
|
|
Working Notes:
Page No 260:
Question 2:
PRACTICAL PROBLEMS
Mrs. Ankita keeps her books under Single Entry System and gives the following information.
|
Particulars
|
01-04-2011
|
31-03-2012
|
|
Investments
|
——
|
12,000
|
|
Bank Overdraft
|
——
|
10,000
|
|
Bills Payable
|
5,000
|
8,000
|
|
Creditors
|
26,500
|
31,500
|
|
Furniture
|
9,000
|
19,000
|
|
Debtors
|
35,000
|
50,000
|
|
Stock in Trade
|
15,000
|
19,000
|
|
Bank Balance
|
18,000
|
28,000
|
Mrs. Ankita withdrew Rs 4,000 for her personal use. She received Rs 15,000 from her father as gift, which she brought into the business.
Additional furniture was purchased on 1st October 2011. Depreciate furniture by 10% p.a.
Write off Rs 1,000 as bad and provide 5% R.D.D. on debtors.
Find the profit or loss of her business for the year ended 31st March, 2012.
Answer:
|
Statement of Affairs
as on April 01,2011
|
|||
|
Liabilities
|
Amount
(Rs)
|
Assets
|
Amount
(Rs)
|
|
Bills Payable
|
5,000
|
Bank Balance
|
18,000
|
|
Creditors
|
26,500
|
Furniture
|
9,000
|
|
Capital (Balancing Figure)
|
45,500
|
Debtors
|
35,000
|
|
|
|
Stock
|
15,000
|
|
|
77,000
|
|
77,000
|
|
|
|
|
|
|
Statement of Affairs
as on March 31,2012
|
|||
|
Liabilities
|
Amount
(Rs)
|
Assets
|
Amount
(Rs)
|
|
Bills Payable
|
8,000
|
Bank Balance
|
28,000
|
|
Creditors
|
31,500
|
Furniture
|
19,000
|
|
Bank Overdraft
|
10,000
|
Debtors
|
50,000
|
|
Capital (Balancing Figure)
|
78,500
|
Stock
|
19,000
|
|
|
|
Investments
|
12,000
|
|
|
1,28,000
|
|
1,28,000
|
|
|
|
|
|
|
Statement of Profit or Loss
for the year ended March 31,2012
|
|
|
Particulars
|
Amount
(Rs)
|
|
Capital at the end of the year
|
78,500
|
|
Add: Drawings made during the year
|
4,000
|
|
Less: Additional capital introduced during the year
|
(15,000)
|
|
Adjusted capital at the end of the year
|
67,500
|
|
Less: Capital in the beginning of the year
|
(45,500)
|
|
|
22,000
|
|
Less: Depreciation on Furniture
|
(1,400)
|
|
Bad-Debts
|
(1,000)
|
|
Reserve for Doubtful Debts
|
(2,450)
|
|
Profit for the year
|
17,150
|
|
|
|
Working Notes:
WN1: Calculation of Depreciation on Furniture:
WN2: Calculation of Reserve for Doubtful Debts:
Page No 260:
Question 3:
PRACTICAL PROBLEMS
Miss Kavita Commenced her business with a Capital of Rs 1,30,000 on 1st April 2010. Her financial Position was as follows as on 31st March, 2011, Cash Rs 9,120, Stock Rs 10,250, Bills Payable Rs 12,880, Creditors Rs 17,180, Debtors Rs 31,550, Bill Receivable Rs 29,120, Premises Rs 85,750, Vehicles Rs 40,250.
Additional Information:
1) She brought additional capital Rs 20,000 on 30th September 2010. Interest on capital is to be provided at 5% p.a.
2) She withdrew Rs 10,000 for personal use on which interest is to be charged at 6% p.a.
3) R.D.D. is to be provided at 2½% p.a. after providing bad debts Rs 1,000.
4) Depreciate Vehicles at 2% and Premises at 4%.
Answer:
|
Statement of Affairs
as on March 31,2011
|
|||
|
Liabilities
|
Amount
(Rs)
|
Assets
|
Amount
(Rs)
|
|
Bills Payable
|
12,880
|
Cash in Hand
|
9,120
|
|
Creditors
|
17,180
|
Stock
|
10,250
|
|
Capital (Balancing Figure)
|
1,75,980
|
Debtors
|
31,550
|
|
|
|
Premises
|
85,750
|
|
|
|
Vehicle
|
40,250
|
|
|
|
Bills Receivable
|
29,120
|
|
|
|
Prepaid Expenses
|
|
|
|
2,06,040
|
|
2,06,040
|
|
|
|
|
|
|
Statement of Profit or Loss
for the year ended March 31,2011
|
|
|
Particulars
|
Amount
(Rs)
|
|
Capital at the end of the year
|
1,75,980
|
|
Add: Drawings made during the year
|
10,000
|
|
Less: Additional capital introduced during the year
|
(20,000)
|
|
Adjusted capital at the end of the year
|
1,65,980
|
|
Less: Capital in the beginning of the year
|
(1,30,000)
|
|
|
35,980
|
|
Add: Interest on Drawings
|
300
|
|
Less: Interest on Capital
|
(7,000)
|
|
Bad-Debts
|
(1,000)
|
|
|
(764)
|
|
Depreciation on Premises
|
(3,430)
|
|
Depreciation on Vehicle
|
(805)
|
|
Profit for the year
|
23,281
|
|
|
|
Working Notes:
WN1: Calculation of Depreciation on Premises and Vehicle:
WN2: Calculation of Interest on Capital:
WN3 Calculation of Interest on Drawings:
Notes:
1.When date of drawings is not mentioned, then interest on drawings is to be charged for 6 months.
2. As per the book, the Profit as per Statement is Rs 22,620 but according to our solution it should be Rs 23,281.
Page No 260:
Question 4:
PRACTICAL PROBLEMS
Mahendra Keeps his books by Single Entry System. His position on 1st April 2012, was as follows : Cash in Hand Rs 7,900, Cash at Bank Rs 20,000, Debtors Rs 18,000. Stock Rs 29,000, Motor Car Rs 5,000, Bank Loan Rs 18,000 and Outstanding Expenses Rs 2,700.
On 1st October, 2012 Mahendra introduced Rs 10,000 as further capital in the business and withdrew on the same date Rs 7,000 out of which he spent Rs 5,000 on the purchase of a Machinery for the business.
On 31st March 2013 his position was as follows: Cash in Hand Rs 7,600, Cash at Bank Rs 22,000, Stock Rs 30,000 Debtors Rs 25,700, Furniture Rs 6,000, Creditors Rs 25,200, and prepaid expenses Rs 200.
Prepare a Statement showing the Profit or Loss made by him during the year ended 31st March, 2013 and Opening and Closing Statement of affairs. Considered the following adjustments also.
1) Depreciate Motor Car and Furniture @ 10% p.a. Furniture was purchased on 1st Oct., 2012.
2) Provide Rs 1,200 for Bad debts and provide 5% R.D.D.
3) Goods taken for personal use by Mahendra amounting to Rs 1,500
4) Provide interest on capital @ 10% p.a.
Answer:
|
Statement of Affairs
as on Apr.01,2012
|
|||
|
Liabilities
|
Amount
(Rs)
|
Assets
|
Amount
(Rs)
|
|
Bank Loan
|
18,000
|
Cash in Hand
|
7,900
|
|
Outstanding Expenses
|
2,700
|
Cash at Bank
|
20,000
|
|
Capital (Balancing Figure)
|
59,200
|
Debtors
|
18,000
|
|
|
|
Stock
|
29,000
|
|
|
|
Motor Car
|
5,000
|
|
|
79,900
|
|
79,900
|
|
|
|
|
|
|
Statement of Affairs
as on March 31,2013
|
|||
|
Liabilities
|
Amount
(Rs)
|
Assets
|
Amount
(Rs)
|
|
Creditors
|
25,200
|
Cash in Hand
|
7,600
|
|
Capital (Balancing Figure)
|
71,300
|
Cash at Bank
|
22,000
|
|
|
|
Stock
|
30,000
|
|
|
|
Debtors
|
25,700
|
|
|
|
Furniture
|
6,000
|
|
|
|
Prepaid Expenses
|
200
|
|
|
|
Machinery
|
5,000
|
|
|
96,500
|
|
96,500
|
|
|
|
|
|
|
Statement of Profit or Loss
for the year ended March 31,2013
|
|
|
Particulars
|
Amount
(Rs)
|
|
Capital at the end of the year
|
71,300
|
|
Add: Drawings made during the year
|
3,500
|
|
Less: Additional capital introduced during the year
|
(10,000)
|
|
Adjusted capital at the end of the year
|
64,800
|
|
Less: Capital in the beginning of the year
|
(59,200)
|
|
|
5,600
|
|
Less: Depreciation on( Rs 500 on Motor Car+Rs 300 on Furniture)
|
(800)
|
|
Bad-Debts
|
(1,200)
|
|
|
(1,225)
|
|
Interest on Capital
|
(6,420)
|
|
Loss for the year
|
(4,045)
|
|
|
|
Working Notes:
Calculation of Interest on Capital:
Page No 261:
Question 5:
PRACTICAL PROBLEMS
Mr. Suhas a small trader provides you the following details about his business.
|
Particulars
|
01-04-2011
|
31-03-2012
|
|
Debtors
|
45,000
|
50,000
|
|
Creditors
|
60,000
|
70,000
|
|
Computer
|
60,000
|
1,20,000
|
|
10% Govt. Bonds
|
——
|
10,000
|
|
Bank Overdraft
|
80,000
|
40,000
|
|
Motor Van
|
80,000
|
80,000
|
|
Furniture
|
10,000
|
10,000
|
|
Stock
|
65,000
|
80,000
|
|
Cash in Hand
|
2,000
|
8,000
|
|
Bills Receivable
|
60,000
|
80,000
|
Additional Information:
1) On 1st October, 2012 he withdrew Rs 40,000 for his personal use.
2) Charge interest on drawings Rs 2,000.
3) He had also withdrawn Rs 30,000 for Rent of his residential flat.
4) Depreciate furniture by 10% and write off Rs 2,000 from motor van.
5) 10% Government Bonds were purchased on 1st October, 2012.
6) Allow interest on capital at 10% p.a.
7) Rs 2,000 is written off as bad debts and provide 5% R.D.D. on Debtors.
Prepare: Opening statement of affairs, closing statement of affairs and statement of profit or loss for the year ended 31st March, 2012.
Answer:
|
Statement of Affairs
as on March Apr.01,2011
|
|||
|
Liabilities
|
Amount
(Rs)
|
Assets
|
Amount
(Rs)
|
|
Creditors
|
60,000
|
Cash in Hand
|
2,000
|
|
Bank Overdraft
|
80,000
|
Debtors
|
45,000
|
|
Capital (Balancing Figure)
|
1,82,000
|
Computer
|
60,000
|
|
|
|
Motor Van
|
80,000
|
|
|
|
Furniture
|
10,000
|
|
|
|
Stock
|
65,000
|
|
|
|
Bills Receivable
|
60,000
|
|
|
3,22,000
|
|
3,22,000
|
|
|
|
|
|
|
Statement of Affairs
as on March 31,2012
|
|||
|
Liabilities
|
Amount
(Rs)
|
Assets
|
Amount
(Rs)
|
|
Creditors
|
70,000
|
Cash in Hand
|
8,000
|
|
Bank Overdraft
|
40,000
|
Debtors
|
50,000
|
|
Capital (Balancing Figure)
|
3,28,000
|
Computer
|
1,20,000
|
|
|
|
Motor Van
|
80,000
|
|
|
|
Furniture
|
10,000
|
|
|
|
Stock
|
80,000
|
|
|
|
Bills Receivables
|
80,000
|
|
|
|
10% Government Bond
|
10,000
|
|
|
4,38,000
|
|
4,38,000
|
|
|
|
|
|
|
Statement of Profit or Loss for the year ended March 31,2012 |
|
|
Particulars |
Amount (Rs) |
|
Capital at the end of the year |
3,28,000 |
|
Add: Drawings made during the year |
70,000 |
|
Adjusted capital at the end of the year |
3,98,000 |
|
Less: Capital in the beginning of the year |
(1,82,000) |
|
|
2,16,000 |
|
Add: Interest on Drawings |
2,000 |
|
Interest on 10% Government Bonds |
500 |
|
Less: Depreciation (Rs 1,000 on Furniture and Rs 2,000 on Motor Van) |
(3,000) |
|
Interest on Capital |
(18,200) |
|
Bad-Debts |
(2,000) |
|
|
(2,400) |
|
Profit for the year |
1,92,900 |
|
|
|
Working Notes:
Page No 261:
Question 6:
PRACTICAL PROBLEMS
Mr. Govind keeps his books on single entry system and disclosed the following information of his business.
|
Particulars
|
01-04-2010
|
31-03-2011
|
|
Investments
|
—–
|
30,000
|
|
Bills Payable
|
—–
|
18,000
|
|
Creditors
|
52,500
|
69,000
|
|
Furniture
|
15,000
|
15,000
|
|
Debtors
|
60,000
|
90,000
|
|
Stock in Trade
|
30,000
|
37,500
|
|
Cash at Bank
|
36,000
|
54,000
|
Additional Information
1) Mr. Govind transferred Rs 300 per month during first half year and Rs 200 each month for the remaining period from his business to his personal account. He also took goods of Rs 700 for private use.
2) Mr. Govind sold his personal asset for Rs 7,000 and brought the proceeds into his business.
3) Furniture to be depreciated by 10%
4) Provide R.D.D.5% on Debtors.
Prepare: Opening and closing statement of affairs and statement of profit or loss for the year ended 31st March 2011.
Answer:
|
Statement of Affairs
as on Apr. 01,2010
|
|||
|
Liabilities
|
Amount
(Rs)
|
Assets
|
Amount
(Rs)
|
|
Creditors
|
52,500
|
Cash in Bank
|
36,000
|
|
Capital (Balancing Figure)
|
88,500
|
Furniture
|
15,000
|
|
|
|
Debtors
|
60,000
|
|
|
|
Stock in Trade
|
30,000
|
|
|
1,41,000
|
|
1,41,000
|
|
|
|
|
|
|
Statement of Affairs
as on March 31,2011
|
|||
|
Liabilities
|
Amount
(Rs)
|
Assets
|
Amount
(Rs)
|
|
Bills Payable
|
18,000
|
Cash in Bank
|
54,000
|
|
Creditors
|
69,000
|
Investments
|
30,000
|
|
Capital (Balancing Figure)
|
1,39,500
|
Furniture
|
15,000
|
|
|
|
Debtors
|
90,000
|
|
|
|
Stock in Trade
|
37,500
|
|
|
2,26,500
|
|
2,26,500
|
|
|
|
|
|
|
Statement of Profit or Loss
for the year ended ….
|
|
|
Particulars
|
Amount
(Rs)
|
|
Capital at the end of the year
|
1,39,500
|
|
Add: Drawings made during the year
|
3,700
|
|
Less: Additional capital introduced during the year
|
(7,000)
|
|
Adjusted capital at the end of the year
|
1,36,200
|
|
Less: Capital in the beginning of the year
|
(88,500)
|
|
|
47,700
|
|
Less: Depreciation on Furniture
|
(1,500)
|
|
Reserve for Doubtful Debts
|
(4,500)
|
|
Profit for the year
|
41,700
|
|
|
|
Working Notes:
Page No 262:
Question 7:
PRACTICAL PROBLEMS
Sun and Moon are partners in a firm sharing profit and losses in the ratio of 3:2. They kept their books under single entry system. On 1st April 2010 the following statement of affairs was extracted from their Books.
|
Statement of Affairs |
|||
|
as on 1st April 2010 |
|||
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
Capitals: |
|
Plant and Machinery |
15,000 |
|
Sun |
12,500 |
Stock |
10,000 |
|
Moon |
10,000 |
Debtors |
17,500 |
|
Creditors |
15,000 |
Cash in Hand |
7,500 |
|
Bills Payable |
12,500 |
|
|
|
|
50,000 |
|
50,000 |
|
|
|
|
|
On 31st March 2011 theirs assets and liabilities were as follows. Plant and Machinery Rs 44,000 stock Rs 32,000 cash in hand Rs 12,000 creditors Rs 8,000 Debtors Rs 20,000 Bills payable Rs 15,000 Drawings during the year Sun Rs 5,000 and Moon Rs 3,000.
Prepare: Closing statement of affairs and statement of profit or Loss for the year ended 31st March 2011 after considering the following adjustments.
1) Plant is found overvalued by 10% and stock is found undervalued by 20%.
2) R.D.D. is to be created at 10% on Debtors.
3) Interest on Capital is to be allowed at 10% p.a. and 10% p.a. on Drawings
Answer:
|
Statement of Affairs
as on March 31,2011
|
|||
|
Liabilities
|
Amount
(Rs)
|
Assets
|
Amount
(Rs)
|
|
Bills Payable
|
15,000
|
Cash in Hand
|
12,000
|
|
Creditors
|
8,000
|
Stock
|
32,000
|
|
Capital (Balancing Figure)
|
85,000
|
Plant and Machinery
|
44,000
|
|
|
|
Debtors
|
20,000
|
|
|
1,08,000
|
|
1,08,000
|
|
|
|
|
|
|
Statement of Profit or Loss
for the year ended March 31,2011
|
||
|
Particulars
|
Amount
(Rs)
|
Amount
(Rs)
|
|
Capital at the end of the year
|
|
85,000
|
|
Add: Drawings made during the year
|
|
|
|
Sun
|
5,000
|
|
|
Moon
|
3,000
|
8,000
|
|
Adjusted capital at the end of the year
|
|
93,000
|
|
Less: Capital in the beginning of the year
|
|
|
|
Sun
|
(12,500)
|
|
|
Moon
|
(10,000)
|
(22,500)
|
|
|
|
70,500
|
|
Add: Interest on Drawings
|
|
|
|
Sun
|
250
|
|
|
Moon
|
150
|
400
|
|
Stock (32,000 × 20%)
|
|
6,400
|
|
Less: Reserve for Doubtful Debts (20,000 × 10%)
|
|
(2,000)
|
|
Interest on Capital
|
|
|
|
Sun
|
(1,250)
|
|
|
Moon
|
(1,000)
|
(2,250)
|
|
Plant (44,000 × 10%)
|
|
(4,400)
|
|
Profit or Loss for the year
|
|
68,650
|
|
|
|
|
Note: There is a mismatch in the Net Profit as given in the textbook (which is Rs 70,650) and that of as per the above solution (which is Rs 68,650).
Page No 262:
Question 8:
PRACTICAL PROBLEMS
A and B are in Partnership. Their Capitals on 1st April 2010 were Rs 30,000 each. The assets and liabilities as on 31st March 2011 were as follows. Cash in hand Rs 2,400, Cash at Bank Rs 16,000 Bill Receivable Rs 4,000, Debtors Rs 28,600 Stock Rs 26,000. Machinery Rs 14,000, furniture Rs 8,000, Bills Payable Rs 3,000 Sundry creditors Rs 6,000 Outstanding salary Rs 800.
Additional Information:
1) Provide Rs 600 as Bad Debts and 5% R.D.D.
2) Depreciate furniture @ 5% p.a. and Machinery @ 10% p.a.
3) Stock is found undervalued by Rs 2,000.
4) Sundry creditors are found overvalued by Rs 1,000.
5) Prepaid Insurance Rs 2,000.
6) Additional capital introduced by partners Rs 4,000 each.
7) Drawings of ‘A’ Rs 3,000 and ‘B’ Rs 2,000 calculate the profit for the year ended 31st March 2011.
Answer:
|
Statement of Affairs
as on March 31,2011
|
|||
|
Liabilities
|
Amount
(Rs)
|
Assets
|
Amount
(Rs)
|
|
Bills Payable
|
3,000
|
Cash in Hand
|
2,400
|
|
Outstanding Salary
|
800
|
Cash at Bank
|
16,000
|
|
Sundry Creditors
|
6,000
|
Bills Receivable
|
4,000
|
|
Capital (Balancing Figure)
|
89,200
|
Debtors
|
28,600
|
|
|
|
Stock
|
26,000
|
|
|
|
Machinery
|
14,000
|
|
|
|
Furniture
|
8,000
|
|
|
|
|
|
|
|
99,000
|
|
99,000
|
|
|
|
|
|
|
Statement of Profit or Loss
for the year ended March 31,2011
|
||
|
Particulars
|
Amount
(Rs)
|
|
|
Capital at the end of the year
|
|
89,200
|
|
Add: Drawings made during the year
|
|
|
|
A
|
3,000
|
|
|
B
|
2,000
|
5,000
|
|
Less: Additional capital introduced during the year
|
|
|
|
A
|
4,000
|
|
|
B
|
4,000
|
(8,000)
|
|
Adjusted capital at the end of the year
|
|
86,200
|
|
Less: Capital in the beginning of the year
|
|
|
|
A
|
30,000
|
|
|
B
|
30,000
|
(60,000)
|
|
|
|
26,200
|
|
Add: Undervalued Stock
|
|
2,000
|
|
Prepaid Insurance
|
|
2,000
|
|
Overvalued Creditors
|
|
1,000
|
|
Less: Bad-Debts
|
|
(600)
|
|
Reserve for Doubtful Debts (28,000 × 5%)
|
|
(1,400)
|
|
Depreciation on Machinery
|
|
(1,400)
|
|
Depreciation on Furniture
|
|
(400)
|
|
Profit for the year
|
|
27,400
|
|
|
|
|
Note: In this question too, there seems to be the same problem as we have faced in the last question. The Net Profit as given in the textbook amounts to Rs 31,400, while, as per the solution above, it should be Rs 27,400.
Page No 263:
Question 9:
PRACTICAL PROBLEMS
Asha and Usha were partners sharing profits and losses in the ratio of 2:1. Prepare their statement Profit or Loss for the year ended 31st March, 2012 from the following statement of Affairs as on 31st March, 2011.
|
Liabilities
|
Amount
Rs
|
Assets
|
Amount
Rs
|
|
Creditors
|
33,000
|
Cash at Bank
|
6,000
|
|
Bills Payable
|
9,000
|
Cash in Hand
|
2,000
|
|
Capitals:
|
62,000
|
Building
|
41,000
|
|
Asha
|
32,000
|
Machinery
|
21,000
|
|
Usha
|
|
Furniture
|
10,000
|
|
|
|
Stock
|
18,000
|
|
|
|
Debtors
|
25,000
|
|
|
|
Bills Receivable
|
13,000
|
|
|
1,36,000
|
|
1,36,000
|
|
|
|
|
|
The assets and liabilities as on 31st March 2012 were:
Sundry creditors Rs 35,000 Bill Receivable Rs 18,000 Bills payable Rs 15,000 cash in hand Rs 3,000, Stock Rs 32,000 Cash of bank Rs 6,000 Debtors Rs 38,000. There were no changes in fixed assets.
Further Information:
1) Asha and Usha had drawn Rs 10,000 and Rs 8,000 respectively for personal use.
2) They also brought additional capital of Rs 6,000 and Rs 4,000 respectively.
3) Building to be depreciated by 5% and machinery and furniture at 10%.
4) Charge interest at 10% p.a. on opening capitals and allow interest on drawings of Asha and Usha were Rs 700 and Rs 500 respectively.
Answer:
|
Statement of Affairs
as on March 31,2012
|
|||
|
Liabilities
|
Amount
(Rs)
|
Assets
|
Amount
(Rs)
|
|
Bills Payable
|
15,000
|
Cash in Hand
|
3,000
|
|
Sundry Creditors
|
35,000
|
Cash at Bank
|
6,000
|
|
Capital (Balancing Figure)
|
1,19,000
|
Stock
|
32,000
|
|
|
|
Debtors
|
38,000
|
|
|
|
Bills Receivable
|
18,000
|
|
|
|
Building
|
41,000
|
|
|
|
Machinery
|
21,000
|
|
|
|
Furniture
|
10,000
|
|
|
1,69,000
|
|
1,69,000
|
|
|
|
|
|
|
Statement of Profit or Loss
for the year ended March 31,2012
|
||
|
Particulars
|
Amount
(Rs)
|
Amount
(Rs)
|
|
Capital at the end of the year
|
|
1,19,000
|
|
Add: Drawings made during the year
|
|
|
|
Asha
|
10,000
|
|
|
Usha
|
8,000
|
18,000
|
|
Less: Additional capital introduced during the year
|
|
|
|
Asha
|
(6,000)
|
|
|
Usha
|
(4,000)
|
(10,000)
|
|
Adjusted capital at the end of the year
|
|
1,27,000
|
|
Less: Capital in the beginning of the year
|
|
|
|
Asha
|
(62,000)
|
|
|
Usha
|
(32,000)
|
(94,000)
|
|
|
|
33,000
|
|
Add: Interest on Drawings
|
|
|
|
Asha
|
700
|
|
|
Usha
|
500
|
1,200
|
|
Less: Depreciation (Building+Machinery+Furniture)
|
|
(5,150)
|
|
Interest on Capital
|
|
|
|
Asha
|
(6,200)
|
|
|
Usha
|
(3,200)
|
(9,400)
|
|
Profit for the year
|
|
|
|
Asha
|
13,100
|
|
|
Usha
|
6,550
|
19,650
|
|
|
|
|
View NCERT Solutions for all chapters of Class 15