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ACCOUNTING CA/CMA SANTOSH KUMAR

CHAPTER 16. Accounts from incomplete Records-(SINGLE ENTRY SYSTEM)

INTRODUCTION: We have, so far, discussed Double Entry System; according to which, both the aspects of a
transaction are recorded. Another system of recording transactions in the books of account is Single Entry
System, under which both the aspects of a transaction may not be recorded. Unlike Double Entry System, in
Single Entry System, no set rules are followed—even the books of account to be maintained are not certain.
Usually, under this system, the Cash Book and personal accounts of debtors and creditors are maintained; real
and nominal accounts are not maintained at all. Since both the aspects of transactions are not recorded, the
system is known as Accounts from Incomplete Records or Single Entry System of Accounting. Accounting
records that are not maintained according to Double Entry System are known as Accounts from Incomplete
Records or Single Entry System of Accounting. Sometimes, the term Single Entry System is mistakenly
understood that under this system only one aspect of a transaction is recorded in the books. This is not true.
The fact is that under this system, in certain transactions both the aspects are recorded (for example, cash
received from customers, cash paid to suppliers), for others only one aspect is recorded (for example, cash
paid to acquire a fixed asset) and some transactions are even ignored (for example, depreciation on a fixed
asset).
Features of Single Entry System:
(i) Suitability: This system is suitable for small-size business where the number of transactions is less.
(ii) No Uniformity: This system may differ from firm to firm as it is a mere adjustment of Double Entry
System according to requirements and convenience.
(iii) Maintenance of Personal Accounts: Usually under this system, only personal accounts are
maintained and real and nominal accounts are avoided. Therefore sometimes, it is defined as a
system where only personal accounts are kept.
(iv) Maintenance of Cash Book: Generally, a Cash Book is maintained in this system which mixes up
business as well as private transactions.
(v) Dependence on Original Vouchers: Usually under this system, original vouchers are scrutinised for
collection of information. For example, in case of credit sale, the owner may keep the invoice without
recording it in accounting books and at the end of a particular period the total of the invoices gives
credit sales of the business.
(vi) Difficulty in Preparation of Final Accounts: In the absence of all nominal and real accounts in the
ledger, final accounts cannot be prepared easily.

Advantages of Single Entry System

(i) Simple Method: Single Entry System is a simple method of recording business transactions.
(ii) Less Expensive: It is less expensive when it is compared to Double Entry System of book keeping.
(iii) Suitable for Small Businesses: It is mainly suited to small businesses with limited number of
transactions and very few assets and liabilities.
(iv) No Need of Expert Knowledge: Under Single Entry System, accounting records can be easily
maintained as their maintenance does not require expert knowledge of the principles of book
keeping.
(v) Easy to Ascertain Profit or Loss: Ascertainment of profit or loss is much easier. To ascertain the profit
or loss, the proprietor has to compare the financial condition of business at the close of the
accounting period with that in the beginning.

Disadvantages of Single Entry System :- Single Entry System has the following disadvantages:

(i) Arithmetical Accuracy cannot be Proved: Trial Balance cannot be prepared hence, arithmetical
accuracy of books cannot be proved or tested. Chances of error, mischief or fraud remaining
undetected are high.
(ii) No Control on Assets: Since assets accounts are not maintained, it is difficult to keep full control, in
order to avoid misappropriations of assets.

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(iii) Correct Profit or Loss cannot be Determined: Trading and Profit and Loss Account cannot be
prepared hence, correct profit earned or loss incurred during the accounting period cannot be
determined.
(iv) Financial Position of the Business cannot be assessed: In the absence of assets accounts, it is
difficult to determine correct financial position of the business on any particular day by preparing a
Balance Sheet.
(v) No Internal Check: Since internal check is not possible, the method leaves room for errors and a
fraud, besides their detection becomes difficult.
(vi) Difficult to Ascertain the Value of Business: The records being inadequate, it is difficult to value the
business, especially goodwill.
(vii) Incomplete and Unscientific System: This system is incomplete and unscientific as both the aspects
of a transaction are not recorded and no set rules are followed for recording them.
(viii) Comparative Study is Difficult: A major defect of this system is that the financial position of the
current year cannot be compared with that of the previous year due to incomplete information of
transactions of business.

Difference between Double Entry System and Single Entry System

Basis Double Entry System Single Entry System
1. Both Aspects Under this system, both aspects of Under this system, both aspects of
a transaction are recorded. transaction are not recorded. infact,
for some transactions two aspects,
for some others one aspect and yet
for others no aspect at all are
recorded.
2, Accounts Under this system, personal, real Under this system, only personal
and nominal, etc., all the accounts accounts and Cash Book are
are maintained. Thus, it is a maintained. Hence, it remains an
complete and scientific system of incomplete record of accounts.
accounting.
3. Trial Balance Under this system, Trial Balance is Under this system, Trial Balance
prepared and thus, the arithmetical cannot be prepared due to
accuracy of the books of account is incomplete system of accounting.
verified. Therefore, arithmetical accuracy of
the accounting cannot be verified.
4. Profit or Loss Under this system, after a certain Under this system, Profit and Loss
period, net profit or net loss can be Account is not prepared to
ascertained by preparing the Profit ascertain the net profit or loss.
and Loss Account.
5. Financial Position Under this system, correct financial Under this system, Balance Sheet
position of the business can be is not prepared. Only Statement of
ascertained by preparing the Affairs is prepared. The reason is
Balance Sheet. that the assets and liabilities do not
stand at real amounts but at
estimated amounts.
6. Adjustments Under this system, adjustments are There is no provision to make
made at the time of preparing the adjustments primarily because of
Final Accounts. incompleteness of accounts.
7. Use This system is used by almost all This system is used by only tiny
the businesses. businesses and institutions.
8. Authenticity This system is considered authentic The Court does not consider this
by the Court. system as authentic.

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METHODS OF Ascertaining Profit under the Single Entry System:- The Profit/Loss
in case of Single Entry System can be ascertained by the following two methods:

1. Statement of Affairs Method, and 2. Conversion Method.

1. STATEMENT OF AFFAIRS METHOD (NET WORTH METHOD):- A Statement of Affairs is a statement

of assets and liabilities. Difference between the amounts of the two sides is taken as capital. Under
the Single Entry System, it is necessary to prepare Statement of Affairs at the end of the year and
also in the beginning of the year, if not already prepared to determine profit. Statement of Affairs
like Balance Sheet, has two sides—right-hand side for Assets and left-hand side for Liabilities. The
difference between the total of assets and liabilities is capital.

CAPITAL = TOTAL ASSETS - LIABILITIES

For determining the profit, capital in the beginning of the year must also be determined, if
necessary, by preparing a Statement of Affairs as in the beginning of the year. If the capital at the
end of the year exceeds that in the beginning, it is taken as a profit. If, on the other hand, the capital
in the beginning was more than that at the end, a loss. However, following two adjustments must be
kept in mind for determining the profit:

(i) Adjustments for Capital Introduced: If the proprietor brought in additional capital during
the year, it should be deducted from the capital at the end (since this increase is not due to
profit but fresh introduction of capital).
(ii) Adjustment for Drawings: Drawings by the proprietor should be added to the capital at the
end—had the drawings not been made, the capital at the end of the year would have been
higher.

Formula for determining the Profit is as follows:

Profit = Capital at the end + Drawings - Additional capital introduced - Capital in the beginning

The procedure explained above can simply be summarised as follows:

1. First, prepare the Statement of Affairs in the beginning, for calculating capital in the
beginning.
2. Then, prepare the Statement of Affairs at the end in order to calculate the capital at the
end.
3. Adjust the capital at the end by adding drawings and deducting there from capital
introduced during the year.
4. From the adjusted capital at the end deduct capital in the beginning. This difference is either
a profit or a loss.

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Difference between Balance Sheet and Statement of Affairs

Basis Balance Sheet Statement of Affairs
1. Objective The main objective of preparing The main objective of preparing
Balance Sheet is to know about the Statement of Affairs is to know
financial position of the business. about capital at a point of time.
2. Accounting Method Balance Sheet is prepared when Statement of Affairs is prepared
accounts are maintained under when accounts are maintained
Double Entry System. under Single Entry System.
3. Accounts and Information This is prepared exclusively on the In view of incomplete accounts, its
basis of ledger accounts. preparation is based on limited
accounts, calculations, estimates
and other information.
4. Reliability Being based on actual figures, Since it is based partly on the
Balance Sheet is regarded as a accounts and partly on other
reliable statement. information and one's memory,
hence, it is not a reliable statement.
5. Trial Balance Trial Balance is prepared before In the case of Statement of Affairs,
Balance Sheet is prepared. Trial Balance is not prepared.
6. Arithmetical Accuracy The tallying of Balance Sheet But Statement of Affairs does not
implies arithmetical accuracy of prove in any sense the arithmetical
accounting. accuracy of the accounting.

Question :1. Mohan maintains books on Single Entry System. He gives you the following information:
Capital on 1st April, 2018 30,400
Capital on 1st April, 2019 33,800
Drawings made during the period: April, 2018 to March, 2019 9,600
Capital introduced on 1st August, 2018 4,000
You are required to calculate the profit earned or loss incurred by Mohan.
Answer: Rs 9000
Question: 2. Hari, who keeps his books on Single Entry System, tells you that his capital on 31st
March, 2019 is ₹ 1,87,000 and his capital on 1st April, 2018 was ₹ 1,92,000. He further informs you
that during the year, he withdrew for his household purposes ₹ 84,200. He once sold his investment
of ₹ 20,000 at 2% premium and brought that money into the business. You are required to prepare a
Statement of Profit or Loss.
Question 3:. Sanju started a firm on 1st April, 2018 with a capital of ₹ 10,000. On 1st July, 2018 he
borrowed from his wife a sum of ₹ 4,000 @ 9% p.a. (interest not yet paid) for business and
introduces a further capital of his own amounted to ₹ 1,500. On 31st March, 2019 his position was:
Cash ₹ 600; Stock ₹ 9,400; Debtors ₹ 7,000 and Creditors ₹ 6,000. Ascertain his Profit or Loss taking
into account ₹ 2,000 for his drawings during the year.

Question: 4. Ramanuj keeps his books under Single Entry System. His assets and liabilities were as
under:
31st March, 31st March, 2019
2018 (₹) (₹)
Cash 1,000 900
Sundry Debtors 39,000 45,000
Stock 34,000 32,000
Plant and Machinery 60,000 80,000
Sundry Creditors 15,000 14,900
Bill Payable …….. 5,000

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During 2018-19, he introduced 10,000 as additional capital. He withdrew 3,000 every month for his
household expenses. Ascertain his Profit for the year ended 31st March, 2019
Question: 5. Kalicharan a trader, does not keep proper books of account. However, he furnishes you
the following particulars. 31st March, 2018 (₹) 31st March, 2019 (₹)

Cash at Bank 4,500 3,000

Cash in Hand 300 4,000

Stock-in-Trade 40,000 45,000

Debtors 12,000 20,000

Office Equipment 5,000 5,000

Sundry Creditors 30,000 20,000

Furniture 4,000 4,000

During the year Kalicharan introduced ₹ 6,000 as further capital and withdrew ₹ 4,000 as drawings.
Write off Depreciation on furniture at 10% and on office equipment at 5%. Prepare a statement
showing the Profit and Loss made by him for the year ended 31st March, 2019

Question: 6. Mr. Pappu keeps his books on Single Entry System. From the following information
given by him, ascertain his profit or loss for the year ended 31st March, 2019:
On 31st March, 2018 his position was: Plant and Machinery ₹ 30,000; Stock ₹ 5,000; Cash in Hand ₹
100; Debtors ₹ 17,000; Loan from Mr. Anish ₹ 1,000 at 4% p.a. interest; Bank Overdraft ₹ 1,100 and
Creditors ₹ 12,120. On 31st March, 2019 he owed to his creditors ₹ 9,170 and had paid to Mr. Anish
₹ 500 in lieu of his loan on 1st October, 2018 but had paid no interest. He had bought additional
Plant and Machinery which cost ₹ 13,000. Debtors were ₹ 23,000 out of which ₹ 900 he would not
be able to collect. The Cash and Bank Balance was ₹ 4,100. Stock at the end was valued at ₹ 4,500.
Mr. Pappu withdrew ₹ 8,300 for domestic purposes. He introduced a further capital of ₹ 10,000
during the year.
Solution: Statement of profit and loss for the year ended 31 st March 2019
Particulars ₹
Capital at the end 64,000
Add: Drawings 8,300
72,300
Less: Capital introduced during the year 10,000
Adjusted Capital at the end
Less: Capital in the beginning 62,300
Net Profit for the year 37,880
24,420
st
STATEMENT OF AFFAIRS As at 31 March, 2018
Liabilities ₹ Assets ₹
Loan from Mr. Anish 1,000 Plant and Machinery 30,000
Bank Overdraft 1,100 Stock 5,000
Creditors 12,120 Cash in Hand 100
Capital (Balancing Figure) 37,880 Debtors 17,000

52,100 52,100

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STATEMENT OF AFFAIRS (AFTER ADJUSTMENTS) as at 31st March, 2019

Liabilities ₹ Assets ₹
Creditors 9,170 Plant and Machinery (₹30,000+₹13,000) 43,000
Loan from Mr. Anish (₹1,000-₹500) 500 Stock 4,500
Interest on Loan (WN 1) 30 Cash in Hand and at Bank 4,100
Capital (WN) 64,000 Debtors 23,000
Less: Bad Debts 900 22,100
73,700 73,700

Question:7. A retail trader had not kept proper books of account. From the details given you are
required to ascertain the Profit or Loss for the year ended 31st March, 2019 and also to prepare his
Statement of Affairs as at that date: 1st April, 2018 (₹) 1st April, 2019 (₹)

Stock-in-Trade 16,700 18,100

Sundry Creditors 15,400 19,200
Sundry Debtors 11,200 10,600
Cash in Hand 250 1,400
Bills Receivable 19,200 Nill
Fixtures and Fittings 16,000 5,000
Motor Van 1,500 1,500
Bank Balance Nil 2,900
Drawings during the year amounted to ₹ 2,400. Depreciation Fixtures and Fittings by 10%. ₹ 600 is
irrecoverable from Debtors. Provide 5% for Doubtful Debts and ₹ 200 in respect of Bills Receivable.
Question: 8. Mungerilal started a business with a capital of ₹ 5,00,000. At the end of the year his
position was:

Particulars ₹
Cash In Hand 15,000
Cash at Bank 70,000
Sundry Debtors 1,20,000
Stock 2,40,000
Furniture 75,000
Machinery 2,00,000

Sundry creditors on this date totalled ₹ 80,000. During the year he introduced a further capital of ₹
1,50,000 and withdrew for household expenses ₹ 90,000. You are required to calculate Profit or Loss
during the year.

Question: 9. Gopi Chand maintains his account on Single Entry System. Calculate his profit on 31st
March, 2019 from the following information:
Liabilities and Assets 1st April, 2018 (₹) 31st March, 2019 (₹)
Cash in Hand 1,500 500
Bank Balance 4,500 3,500
Furniture 2,000 2,000
Stock 1,000 3,000
Creditors 4,000 3,000
Debtors 3,000 4,000

During the year his drawings were ₹ 1,000 and additional capital invested ₹ 2,000.

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Question: 10. Mr. Wise keeps his books on Single Entry System and the following information is
disclosed from his records:
As at 1st April, 2018 (₹) As at 31st March, 2019 (₹)
Balance at Bank 3,150 (Cr.) 8,400
Stock-In-Trade 22,500 30,000
Sundry Debtors 45,000 42,800
Furniture 7,500 7,500
Investments 7,500 7,500
Cash in Hand 150 600
Sundry Creditors 37,500 40,000
Bill Payable 1,500 750
Loan from Mr. Faithful --- 4,500
Mr. Wise transferred ₹ 375 every month during the first half of the year and ₹ 300 every month for
the remaining period from the business to his personal bank account by way of drawings. In
addition, he withdrew ₹ 7,500 for his daughter's marriage and ₹ 3,000 for domestic purposes. In
September, 2018, he had received a lottery prize of ₹ 6,000, which he invested in the business. He
sold his private car for ₹ 7,000 and the proceeds were utilised for the business. He wants his
furniture to be depreciated at 10% and a provision for doubtful debts to be created at 5%. He had
not paid two months' salary to his peon ₹ 225 per month and two months' rent outstanding
amounting to ₹ 300. Commission earned but not received by him was ₹ 3,600. Prepare Statement of
Profit or Loss for the year ended 31st March, 2019.

Question: 11. Shanti maintains her books of account from incomplete records. Her books provide
the following information:

Particulars 1st April, 2017 (₹) 31st March, 2018 (₹)

Cash 1,200 1,600
Bills Receivable …. 2,400
Debtors 16,800 27,200
Stock 22,400 24,400
Investments 8,000
Furniture 7,500 8,000
Creditors 14,000 15,200

She withdrew ₹ 300 per month for personal expenses. She sold her investments of ₹ 16,000 at 2%
premium and introduced that amount into business.
You are required to prepare a Statement of Profit or Loss for the year ending 31 st March, 2018.

CONVERSION OF SINGLE ENTRY SYSTEM INTO DOUBLE ENTRY SYSTEM OR PREPARATION OF FINAL
ACCOUNTS FROM INCOMPLETE RECORDS
Under the Single Entry System, Dual Aspect Principle of Accounting does not hold good as two-fold
effects of each and every transaction are not recorded. Hence, a Trial Balance is not prepared and
also the information necessary for the preparation of Trading Account and Profit and Loss Account is
not available. If the profit or loss of the enterprise is to be determined by preparing final accounts,
then the Single Entry Records (i.e., incomplete Records) are converted into Double Entry Records.
Following steps are necessary to prepare Trading and Profit and Loss Account and Balance Sheet
from the incomplete information given in the question:

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Question: 12. Ascertain appropriate missing value (figure) by preparing Total Debtors Account from
the following information:

₹ ₹
Debtors as on 1st April, 2018 20,400 Bad Debts 2,400
Cash received from Debtors 61,800 Debtors as on 31st March, 2019 27,600
(including ₹ 1,000 being the sale proceeds of an old Cash Sales 56,800
typewriter sold on credit, received during the year) Sales Return 5,400

Question: 13. Determine the appropriate missing value (figure) by preparing the Total Creditors
Account from the following information:
₹ ₹
Cash Purchases 17,000 Purchases Return 1,000
Creditors as on 1st April, 2018 8,000 Creditors as on 31st March, 2019 13,400
Cash paid to Creditors 31,000

Question: 14. From the following particulars, ascertain the closing balance of Bills Receivable
Account and opening balance of Bills Payable Account:
Particulars ₹
Opening Balance of Bills Receivable 11,000
Closing Balance of Bills Payable 8,000
Bills Payable issued 35,000
Bills receivable encashed 46,000
Bills Receivable received 49,000
Bills Payable paid in cash 36,000
Bills Receivable dishonoured 1,000

Solution: BILLS RECEIVABLE ACCOUNT

Particulars ₹ ₹
To Balance b/d 11,000 By Cash/Bank A/C 46,000
To Sundry Debtors A/C 49,000 By Sundry Debtors A/C 1,000
By Balance c/d (Balancing Figure) 13,000

60,000 60,000

Dr. BILLS PAYABLE ACCOUNT Cr.

Particulars ₹ ₹
To Cash/Bank A/C 36,000 By Balance b/d (Balancing Figure) 9,000
To Balance c/d 8,000 By Sundry Creditor A/C 35,000

44,000 44,000

Question 15. From the following information, calculate total sales:

₹ ₹
Bills Receivable in the beginning 15,600 Sales Return 17,400
Debtors in the beginning 61,600 Bills Receivable (Dishonoured) 3,600
Bill Receivable encashed during the year 41,800 Bills Receivable at the end 12,000
Cash received from Debtors 1,40,000 Debtors at the end 51,000
Bad Debts written off 5,600 Cash Sales 81,800

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Question: 16. From the following information, calculate total purchases:

₹ ₹
Opening Balance of Bills Payable 15,000 Cash paid to Creditors during the year 90,600
Opening Balance of Creditors 18,000 Bills Payable Discharged during the year 26,700
Opening Balance of Bills Payable 21,000 Purchases Return 3,600
Closing Balance of Creditors 12,000 Cash Purchases 77,400

Question: 17. Determine Total Sales and Total Purchases from the following information:
₹ ₹
Opening Debtors 11,400 Opening Creditors 6,800
Cash received 48,300 Cash Paid to Creditors 25,100
Discount allowed 1,500 Discount received 300
Bad Debts written off 300 Purchased return 600
Sales Return 800 Bills Payable issued 3,100
Bills Receivable received 6,100 Closing Creditors 5,400
Closing Debtors 10,800
Additional Information: Cash Sales - ₹ 1,00,000 and Cash Purchases - ₹ 50,000.

Question: 18. From the following information, prepare Total Debtors Account and Total Creditor
Account and find out credit sales and credit purchases:

₹ ₹
Debtors as on 1st April, 2018 50,000 Bad Debts written off 12,000
Creditors as on 1st April 2018 40,000 Bad Debts recovered 3,000
Debtors as on 31st March, 2019 40,000 Bills Receivable endorsed to Creditors 40,000
Creditors as on 31st March 2019 60,000 Bills Receivable Dishonoured by customers 10,000
Bills Receivable received during the year 1,00,000 Endorsed Bills Receivable dishonoured 5,000
Bills Payable issued during the year 80,000 Discounted Bills Receivable dishonoured 7,000
Cash received from customer 3,00,000 Sales Return 6,000
Cash returned to customers 5,000 Purchases Return 2,000
Discount allowed by suppliers 2,700 Cash paid to suppliers 2,07,000
Discount allowed to customers 1,500

Question: 19. From the following information, ascertain the value of Opening Stock:

₹ ₹
Purchases 2,20,000 Wages 7,000
Sales 3,60,000 Carriage Outwards 6,000
Closing Stock 40,000 Rate of Gross Profit on Cost of Goods sold 50%

Solution: Gross profit Rs 1,20,000 and opening stock Rs 53,000.

Question: 20. From the following information, ascertain the value of Closing Stock:

Particulars ₹
Stock in the beginning 10,000
Cash Sales 30,000
Credit Sales 20,000
Purchases 35,000
Indirect Expenses 7,000
Rate of Gross Profit on Cost 1/3

Solution: gross profit Rs 12,500, closing stock Rs 7500.

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Question : 21. From the following information, calculate the amount to be taken to Profit and Loss
Account: (i) Rent paid as per Cash Book ₹ 70,000; and (ii) Rent outstanding at the end ₹ 10,000:
Solution: Total Rent: ₹
Rent Paid 70,000
Add: Outstanding Rent 10,000
Total Rent (To be shown in Profit and Loss A/C 80,000
Rent outstanding ₹ 10,000 will also appear on the liabilities side of the Balance Sheet.
Question: 22. From the following particulars, calculate the value of Land to be shown in the Balance
Sheet as on 31st March, 2019:

Land as on 1st April, 2018 10,00,000

Purchase of land during 2018-19 30,00,000
Sale of land during 2018-19 15,00,000
Solutions:
Particulars ₹ Particulars ₹
To Balance b/d 10,00,000 By Bank A/C 15,00,000
To Bank A/C (Purchases) 30,00,000 By Balance c/d 25,00,000
40,00,000 40,00,000

Question: 23. Sri did not maintain his Books of Accounts properly. From the following data, prepare
final accounts for the year ended 31st March, 2019:

₹ ₹
Opening Stock 1,00,000 Cash received from debtors 6,40,000
Creditors on 1st April, 2018 40,000 Cash paid to creditors 3,60,000
Cash in Hand on 31st March, 2018 60,000 Cash purchases 40,000
Furniture on 1st April, 2018 20,000 Credit purchases 6,00,000
Salaries 68,000 Closing stock 80,000
Rent 24,000 Debtors on 31st March, 2019 2,40,000
Other expenses 48,000 Debtors on 1 April, 2018 1,00,000
Cash sales 80,000 Drawings 1,00,000
Credit sales 8,00,000 Discount allowed to debtors 20,000

Question: 24. The position of Manmoji Lal’s business as on 1st April, 2018 was as follows: Sundry
Creditors ₹ 1,70,000; Freehold Premises ₹ 5,00,000; Stock ₹ 2,50,000; Sundry Debtors ₹ 2,00,000;
Furniture ₹ 20,000. An abstract of the Cash Book is given below:

Receipts ₹ Payments ₹
st
Sundry Debtors 1,50,000 Bank Overdraft (1 April, 2018) 1,00,000
Sales(cash basis) 8,00,000 Expenses 5,00,000
Drawings 30,000
Sundry Creditors 2,00,000
Cash in Hand 20,000
Cash at Bank 1,00,000
9,50,000 9,50,000
Additional Information: Closing Stock ₹ 3,00,000; Closing Debtors ₹ 2,50,000; Closing Creditors ₹
1,20,000. No additions were made during the year to Premises and Furniture Account, but they are
to be depreciated @ 10% and 15% respectively. A Bad Debts Provision of 2 ½% is to be raised.

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Prepare Trading and Profit and Loss Account for the year ended 31st March, 2019 and the Balance
Sheet as on that date.

Question: 25. kaju does not maintain proper books of account. From the following particulars,
prepare the Trading and Profit and Loss Account for the year ended 31st March, 2019 and the
Balance Sheet as on the that date:

Particulars 31st March, 31st March,

2018 (₹) 2019 (₹)
Debtors 90,000 1,25,000
Stock 49,000 66,000
Furniture 5,000 7,500
Creditors 30,000 22,500
Analysis of other transactions is as follows:

Particulars ₹
Cash collected from Debtors 3,04,000
Cash paid to Creditors 2,20,000
Salaries 60,000
Rent 7,500
Office Expenses 9,000
Drawings 15,000
Additional Capital introduced 10,000
Cash Sales 7,500
Cash Purchases 25,000
Discount Received 3,500
Discount Allowed 1,500
Return Inward 5,000
Return Outward 4,000
Bad Debts 1,000

He had ₹ 25,000 as Cash Balance in the beginning of the year.

Question : 26. Babua commenced business on 1st April, 2018 with a capital of ₹ 2,50,000. Out of this
he purchased Furniture for ₹ 40,000. During the year he borrowed from his wife ₹ 50,000 and
introduced a further capital of ₹ 30,000. From the following particulars extracted from his books
which are kept under Single Entry System, you are required to prepare the Trading and Profit and
Loss Account for the year ended 31st March, 2019 and the Balance Sheet as on that date:

Particulars ₹
Receipt from Debtors 4,67,000
Cash Sales 3,00,000
Cash purchases 1,00,000
Wages paid 10,000
Salaries to Staff 62,000
General Expenses 34,000
Cash withdrawn by the Proprietor 77,000
Cash paid to Creditors 5,00,000
Other information:
Discount allowed to Debtors 8,000
Debts written off 15,000

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ACCOUNTING CA/CMA SANTOSH KUMAR

Babua used goods of ₹ 13,000 for private purposes which is not recorded in the books. On 31st
March, 2019 his Debtors were ₹ 2,10,000 and Creditors ₹ 1,50,000. Stock-in-Trade on 31st March,
2019 was valued at ₹ 1,00,000. Furniture is to be depreciated at 20% per annum.

Question: 27. Ram khilawan keeps his books on Single Entry System. From the following information
provided by him, prepare Trading and Profit and Loss Account for the year ended 31st March, 2019
and Balance Sheet as at that date:

Particulars 31st March, 31st March,

2018 (₹) 2019 (₹)
Furniture 1,00,000 1,20,000
Stock of Goods-in-Trade 60,000 20,000
Sundry Debtors 1,20,000 1,40,000
Prepaid Expenses ……. 4,000
Sundry Creditors 40,000 ?
Unpaid Expenses 12,000 20,000
Cash 22,000 6,000

Receipts and Payments during the year were as follows:

Particulars
Receipts from Debtors 4,20,000
Paid to Creditors 2,00,000
Transportation 40,000
Drawings 1,20,000
Sundry Expenses 1,40,000
Furniture Purchases 20,000

Other Information: There were considerable amount of Cash Sales. Credit Purchases during the year
amounted ₹ 2,30,000. Provided a provision for Doubtful Debts to the extent of 10% on Debtors.

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