OMTEX CLASSES: Mr. Prabhakar is a retail trader. He had no proper methods of accounting. But the following information is made available to you. [March 2012]

Mr. Prabhakar is a retail trader. He had no proper methods of accounting. But the following information is made available to you. [March 2012]


Particulars
Rs.
1.04.09
 Rs.
31.03.10
Sundry Debtors
Sundry Creditors
Bank Overdraft
Stock
Cash in hand
Bills Receivable
Furniture
Motor van
Computer
10% Govt. Bonds
45000
60000
80000
65000
2000
60000
10000
80000
60000
50000
70000
40000
80000
8000
80000
10000
80000
120000
10000

On 1st October, 2009, Mr. Prabhakar had withdrawn Rs. 40000 for his personal use. He had also withdrawn Rs. 30000 for his daughter’s marriage. 10% Government Bonds were purchased of Rs. 10,000 on 1st October, 2009.  Depreciate furniture by 10% and write off Rs. 2000 from motor van.  Rs. 2000 is written off as bad debts and provide 5% R.D.D. on debtors. Allow interest on capital at 10% p.a. Charge interest on drawings Rs. 2,000. Prepare Opening statement of affairs of 1.4.2009.  Closing statement of affairs of 31.3.2010.  Statement showing Profit or Loss for the year ended on 31.3.2010.

Solution: In the books of Mr. Prabhakar
Statement of Affairs as on 1-4-09 and 31.03.10
Liability
1 – 4 – 09
31 – 3 – 10
Assets
1 – 4 – 09
31 – 3 – 10
Capital
(Bal. Fig.)
182000
328000
Sundry Debtors
45000
50000



Stock
65000
80000



Cash in hand
2000
8000



Bills Receivable
60000
80000



Furniture
10000
10000



Motor van
80000
80000
Sundry Creditors
60000
70000
Computer
60000
120000
Bank Overdraft
80000
40000
10% Govt. Bonds
-
10000

322000
438000

322000
438000

Statement of Profit or Loss for the year ended 31.03.2010
Particulars
Rs.
Rs.
Capital at the end of the year

328000
Add: Drawings:


Personal use
Prabhakar's Daughter Marriage
40000
30000

70000


398000
Less: Capital at the beginning of the year

-182000
Trading Profit

216000
Less: Depreciation


On Furniture
10000 × 10%
1000

On Motor van
2000
3000


213000
Less: Bad debts

-2000


211000
Less: RDD @ 5% on Debtors


(50000 – 2000) × 5%

-2400


208600
Add: Interest on 10% Govt. Bonds


10000 × 10% × 6 months

500


209100
Less: Interest on Capital


On opening capital
182000 × 10%

-18200


190900
Add: Interest on drawings

2000
Net Profit

192900