Mr. All keeps his books under single entry system. His capital on 31st March, 20

Question

Mr. All keeps his books under single entry system. His capital on 31st March, 2010 is Rs. 60, 000. On 1st October, 2010, Mr. All introduced Rs. 10, 000 as additional capital in the business and withdrew on the same date Rs. 11, 000, out of which he spent Rs. 10, 000 on the purchase of a new machine for the business. On 31st March, 2011, his financial position was as follows: Cash in hand Rs. 27, 000; Inventory Rs. 34, 000; Accounts receivable Rs. 24.000; Furniture Rs. 5, 000; Accounts payable Rs. 20.000; From the above mentioned information, prepare the Statement of affairs as on 31st March, 2011 and Statement of Profit or Loss for the year ending 31st March. 2011 after taking into account the following adjustments: Depreciate furniture and machine @ 10% p.a; Write off bad debts Rs. 4.000 and provide 10% for doubtful debts; Goods taken by Mr. Ali for his personal use Rs. 1.500; & Provide interest on capital @ 10% p.a.

Explanation / Answer

Less : Interest on Capital Less : Interest on Capital Less : Interest on Capital Less : Interest on Capital Less : Interest on Capital Less : Interest on Capital Less : Interest on Capital Less : Interest on Capital Less : Interest on Capital Less : Interest on Capital Less : Interest on Capital Less : Interest on Capital                            Statement of Affairs as on March 31, 2011 Accounts Payable 20,000    Cash 27,000 Capital 75,500    Inventory 34,000 (Balancing figure)    A/R 24,000    Less    Bad debts -4,000    Provision -2,000 18,000    Furniture 5,000 Less: Dep. -500 4,500 Machinery 10,000 Less: Dep. -500 9,500 Drawings 2,500 95,500 95,500        Statement of P & L Account for the year Ended March 31, 2011 Capital 75,500 Less : Opening Capital -60000 Less : Additional Capital -10,000 Profit before interest 5,500 Less : Interest on Capital -6000 Net Loss -500

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