1st Puc Accountancy Chapter 11 Accounts From Incomplete Records Notes | ಪ್ರಥಮ ಪಿಯುಸಿ ಲೆಕ್ಕಶಾಸ್ತ್ರ ಅಧ್ಯಾಯ – 11 ನೋಟ್ಸ್

1st Puc Accountancy Chapter 11 Accounts From Incomplete Records Notes Question Answer Mcq Pdf Download 2022 Class 11 Accounts Chapter 11 Practical Problems Accounts Chapter 11 Class 11 Solutions Accounts From Incomplete Records Class 12 Notes Kseeb Solutions For Class 11 Accountancy Chapter 11 Notes Pdf ಪ್ರಥಮ ಪಿಯುಸಿ ಲೆಕ್ಕಶಾಸ್ತ್ರ ಅಧ್ಯಾಯ – 11 ನೋಟ್ಸ್

1st Puc Accountancy Chapter 11 Notes

1st Puc Accountancy Chapter 11 Accounts From Incomplete Records Notes | ಪ್ರಥಮ ಪಿಯುಸಿ ಲೆಕ್ಕಶಾಸ್ತ್ರ ಅಧ್ಯಾಯ - 11 ನೋಟ್ಸ್
1st Puc Accountancy Chapter 11 Accounts From Incomplete Records Notes

One Mark Qs

Q1. Write the meaning of Statement of affairs.

A: It is just like a balance sheet. A statement which shows the values of Assets and Liabilities of a business on a given date. This statement helpful to find out capitals of a business.

Q2. What is Adjusted closing capital under Single Entry system

A: Under single entry system adjusted capital means closin capital adjusted with drawings and additional capital called aditional capital [Closing capital + Drawings — Additional Capital = Adjusted capital)

Q3. What is the object of preparing statement of affairs?

A: Single Entry System is inomplete unscientific method of book keeping. For the purpose of finding out capital, Balance sheet equation is applied. The difference between asset and Liability treated as capital [Assets — Liability =Capital].

Q4. If opening capital is ‘60,000, drawings ‘5,000, additional capital’ 10,000, closing capital “90,000 , what will be the profit earned?

A: Profit = Closing capital + Drawings — (Additional capital + Opening capital)
Profit = 90,000 + 5,000 — (10,000 + 60,000) Profit = 25,000.

Q5. Define Single Entry System.

A: Prof: Eric Kholar defines Single Entry System as “a system of book keeping in which as a rule, only records of cash and persons are maintained; it is always in complete double entry, varying with circumstances”.

Q6. Write two features of Single Entry System.

A: The two features of single entry system are.

(a) Both the aspect each and every transactions are not recorded under single entry system.

(b) Under this system all kinds of accounts are not maintained.

Q7. Mention any two merits of Single Entry System

A: The two advantages or merits of single entry systems are

(a) It is a simple and easy method of book-keeping.

(b) It is less costly, because only few books of accounts are maintained.

Q8. State any Two de-merits of Single.

A: Two disadvantages or demerits of sind! entry system is

  1. Both the aspects of each dnd every transaction are not recorded underthis system. So it is incomplete system of records.
  2. Not possible to find out correct profit or loss of a concern.

Q9. Mention the different types of Single Entry System.

A: Three types of single entry systems are:
(a) Pure Single Entry System

(b) Simple Single entry system

(c) Quasi Single Entry system.

Q10. How do you ascertain profit or loss under Single Entry System?

A: Under single entry system profit or loss of a concern can be found in two ways. They are Statement of Affairs method. Conversion of single entry to double entry system method.

Q11. Write the Balance Sheet Equation.

A: Balance Sheet Equation.

Assets = Capital + Liability.

Q12. What is statement of Profit or Loss?

A: Statement of Profit or Loss is a statement prepared under single entry system. It is prepared for the purpose of ascertaining Profit or Loss of a business in a given period.

Q13. Mention the books maintained under Single Entry System.

A: The books maintained under single entry system are

(a) Cash Book

(b) Debtors and Creditors personal a/c

(c) Few Subsidiary books.

Q14. Write any Four examples of Assets mentioned in statement of affairs

A: The assets recorded in statement of affairs are: Land and building, Machinery, Debtors and Cash are Four Examples of Assets.

Q15. tate the meaning of incomplete records.

Accounting records prepared without following the double entry book keeping system strictly are called incomplete records. In this type of recording mechanism some of the transactions are recorded either by making one entry or no entry. In this way it impacts assets, liabilities, revenue and expenses and hence are known as incomplete records.

1st Puc Accountancy Chapter 11 Notes

Six and Twelve Marks Qs

Q1. Distinguish between statement of affairs and balance sheet.

Basis of DifferenceStatement of AffairsBalance Sheet
MeaningIt is a statement that shows the assets, liabilities and capital of a business entity on basis of single entry system of bookkeepingIt is a statement showing assets, liabilities and capital of a business entity prepared on the basis of double entry system of bookkeeping
ReliabilityAs the data is based on estimates, it is not reliable.It is more reliable as it based on a tested method of data entry
Accounting MethodIncomplete records forms the basis of its preparationPrepared from double entry book keeping
AccuracyVery LessAccurate to a large extent

Q2. What practical difficulties are encountered by a trader due to incompleteness of accounting records?

Following difficulties are faced by trader due to incompleteness of accounting records:

1. It is not possible to determine accuracy of accounts and correctly prepare trial balance as the records are not as per the double entry system.

2. It is difficult to make tax authorities believe, the reliability of the income that is computed.

3. Determining and evaluating financial results of a business will not be possible

4. True profit or loss cannot be determined as all transactions are not recorded.

5. Profitability, liquidity and solvency of a business cannot be determined. Hence, investors will be doubtful about investment.

6. Encourages fraud as there is no arithmetical accuracy in the records.

Q3. What are the possible reasons for keeping incomplete records?

Incomplete records are kept due to the following reasons:

  • Businesspersons lack a requisite accounting knowledge and are more inclined to follow this method.
  • Recording transactions using single entry system tends to be less time-consuming and requires less maintenance.
  • It is cost-effective way of keeping records as it doesn’t require a specialist.
  • It gives the owner flexibility to record those transactions which are more important for business.

Q4. What is meant by a ‘statement of affairs’? How can the profit or loss of a trader be ascertained with the help of a statement of affairs?

It is a statement that shows assets and liabilities, that is prepared at the beginning and end of one accounting period. Assets and liabilities are shown in two sides similar to a balance sheet. However, the basic difference between statement of affairs and balance sheet is that, the former is prepared from incomplete records while the latter is prepared from ledger entries. Capital is said to be the difference between the totals of assets and liabilities.

Capital will be shown at the beginning and end of accounting period when a statement of affairs is prepared. Using this information, a statement of profit and loss is prepared to find out the profit or loss. Adjustments needs to be made for withdrawals by owner and for fresh capital introduced by owners during the period.

A business earns profit if the net results of calculation is positive and is said to make a loss if the results are negative. Thus, profit and loss of owners can be determined using this process.

Karnataka 1st PUC Accountancy Chapter 11 Accounts from Incomplete Records

Q5. Is it possible to prepare the profit and loss account and the balance sheet from the incomplete book of accounts kept by a trader’? Do you agree? Explain.

It is possible to prepare profit and loss account and balance sheet from incomplete book of accounts by a process known as conversion method. In this method, the incomplete records gets converted to double entry records. It is easy to convert some of the incomplete entries such as debtors, creditors, cash payments, cash sales and cash receipts as they are easily available. However, there will be some transactions for which details are not available. Still such details can be found using logic. Here are some transactions that are necessary for creating complete record.

1. Opening capital

2. Credit Purchases

3. Credit sales

4. Bills Payable accepted

5. Opening Capital

6. Payment to creditors

In some cases payment received from debtors and amount paid to creditors, for such cases it is essential to prepare debtor or creditor account to determine the values first. The final accounts can be prepared after these accounts are prepared.

Q6. Explain how the following may be ascertained from incomplete records:

(a) Opening capital and closing capital

(b) Credit sales and credit purchases

(c) Payments to creditors and collection from debtors

(d) Closing balance of cash.

1. Opening capital and closing capital: By preparing the opening statement of affairs at the start of the accounting period the opening capital value can be determined, while by preparing a closing statement of affairs, the value of closing capital can be determined.

Statement of Affairs as on…. 

LiabilitiesAmountAssetsAmount
Bills PayableLand and Building
CreditorsPlant and Machinery
Outstanding expensesFurniture
Opening Capital (Balancing Figure)*Stock
Debtors
BankCash
Prepaid Expenses
Opening Capital (Balancing Figure)*

* When total of liabilities are more than total of assets, capital is shown in assets side and represents debit balance.

When the total of assets’ balance exceeds total of liabilities’ balance, capital is shown in the liabilities side.

2. Credit Sales and Credit Purchases: Credit sales are found to be missing from incomplete records. For evaluating it, there is need of preparing total debtors account. The total sales return, if there is any, must be deducted from the total debtors account. The credit sales is given by the balancing figure.

Similarly, to evaluate credit purchases, preparing total creditor account is necessary. Total purchase returns should be deducted from total creditors account. The balancing figure represents the credit purchase.

Total Debtors Account

Dr. Cr.

ParticularsJ.F.AmountParticularsJ.F.Amount
Balance b/dCash (Cash Received)
Bills ReceivableBank (Cheque Received)
(Bill Dishonoured)Discount Allowed
Bank (Cheque Dishonoured)Bad Debts
Credit Sales (Balancing Figure)Sales Returns
Bills Receivable(Bill Received)
Balance c/d

Total Creditors Account

Dr. Cr.

ParticularsJ.F.Amount ₹ParticularsJ.F.Amount
Cash PaidBalance b/d
Bank (Cheque Issued) –Bank(Cheque Dishonoured)
Bills Payable (Bills Accepted) –Bills Payable (Bills Dishonoured)
Discount Received –Credit Purchases
Purchases Returns –(Balancing Figure )
Balance c/d –

3. Payment to creditors and collection from debtors: For determining payment to creditors preparing total creditors account is required, by deducting total purchase returns, the balancing figure provides the payment to creditors while for determining collection from debtors, preparing total debtors account is necessary, by deducting total sales returns, the balancing figure provides the collection from debtors.

4. Closing balance of cash: To evaluate closing balance of cash, preparing cash book summary is necessary. Cash book summary includes all receipts from debit and all payments done during that period in credit part, the balancing figure provides the balance of cash. Total creditor or total debtor accounts are required if amount paid to creditors or received from debtors are not present.

Q7. Following information is given below prepare the statement of profit or loss:

 
Capital at the end of the year5,00,000
Capital in the beginning of the year7,50,000
Drawings made during the period3,75,000
Additional Capital introduced50,000

The solution is as follows:

Statement of Profit and Loss

ParticularsAmount
Capital at the end of the year5,00,000
Add: Drawings made during the year3,75,000
Less: Capital in the beginning of the year(7,50,000)
Less: Additional capital introduced(50,000)
Profit during the year75,000

Q8. Manveer started his business on April 01, 2016 with a capital of ₹ 4, 50,000. On March 31, 2017 his position was as under:

 
Cash99,000
Bills receivable75,000
Plant48,000
Land and Building1,80,000
Furniture50,000

He owned ₹ 45,000 from his friend Susheel on that date. He withdrew ₹ 8,000 per month for his household purposes. Ascertain his profit or loss for this year ended March 31, 2017.

The solution is as follows:

Books of ManveerStatement of Affairs as on March 31, 2017

LiabilitiesAmount ₹AssetsAmount ₹
Loan from Susheel45,000Cash99,000
Bills Receivable75,000
Plant48,000
Closing Capital(Balancing Figure)4,07,000Land and Building1,80,000
Furniture50,000
4,52,0004,52,000

Statement of Profit and Loss as on March 31, 2017

Particulars
Capital on March 31, 20174,07,000
Add: Drawings made during the year (₹ 8,000 × 12)96,000
Less: Capital on April 01, 2016(4,50,000)
Profit during the year 201753,000

Q9. From the information given below ascertain the profit for the year:

 
Capital at the beginning of the year70,000
Additional capital introduced during the year17,500
Stock59,500
Sundry debtors25,900
Business premises8,600
Machinery2,100
Sundry creditors33,400
Drawings made during the year26,400

The solution is as follows:

Statement of Affairs

LiabilitiesAmount ₹AssetsAmount ₹
Sundry Creditors33,400Stock59,500
Capital (Balancing figure)62,700Sundry Debtors25,900
Business Premises8,600
Machinery2,100
96,10096,100

Statement of Profit and Loss

ParticularsAmount
Capital at the end of the year62,700
Add: Drawings made during the year26,400
Less: Capital of the beginning of the year(70,000)
Less: Additional capital introduced during the year(17,500)
Profit during the year1,600

Q10. From the following information, calculate capital at the beginning:

 
Capital at the end of the year4,00,000
Drawings made during the year60,000
Fresh capital introduce during the year1,00,000
Profit of the current year80,000

The solution is as follows:

Capital in the beginning=Capital at the end + Drawings – (Fresh Capital Introduced + Profit)
=4,00,000 + 60,000 – (1,00,000 + 80,000)
=₹ 2,80,000

Q11. Following information is given below: calculate the closing capital

 April.01, 2016March.31, 2017
  ₹
Creditors 5,00030,000
Bills payable 10,00050,000
Loan –50,000
Bills receivable 30,00050,000
Stock 30,00030,000
Cash 2,00020,000

Calculation of profit or loss and ascertainment of statement of affairs at the end of the year (Opening Balance is given)

The solution is as follows:

Statement of Affairs as on April 01, 2016

LiabilitiesAmount ₹AssetsAmount
Creditors5,000Bills Receivable30,000
Bills Payable10,000Stock5,000
Capital (Balancing figure)22,000Cash2000
37,00037,000

Statement of Affairs as on March 31, 2017

LiabilitiesAmount ₹AssetsAmount
Creditors30,000Bills Receivable50,000
Loan50,000Stock30,000
Capital (Balancing figure)20,000Cash20,000
1,00,0001,00,000

Capital on March 31, 2017 (Closing) is ₹ 20,000

Statement of Profit and Loss

ParticularsAmount
Capital on March 31, 201720,000
Less: Capital on April 01, 2016(22,000)
Loss during the year 2017(2,000)

Q12. Mrs. Anu started firm with a capital of ₹ 4, 00,000 on 1st October 2016. She borrowed from her friends a sum of ₹ 1, 00,000 @ 10% per annum (interest paid) for business and brought a further amount to capital ₹ 75,000 on March. 31, 2017, her position was:

 
Cash30,000
Stock4,70,000
Debtors3,50,000
Creditors3,00,000

He withdrew ₹ 8,000 per month for the year. Calculate profit or loss for the year and show your working clearly.

The solution is as follows:

Books of Mrs. AnuStatement of Affairs as on March 31, 2017

LiabilitiesAmount ₹AssetsAmount
Creditors3,00,000Cash30,000
10% Loan from Friends1,00,000Stock4,70,000
Capital (Balancing figure)4,50,000Debtors3,50,000
8,50,0008,50,000

Statement of Profit and Loss as on March 31, 2017

ParticularsAmount
Capital on March 31, 20174,50,000
Add: Drawings during the year (8,000 × 6 months)48,000
Less: Capital on October 01, 2016(4,00,000)
Less: Additional capital introduced(75,000)
Mrs. Anu earned profit during the year 201723,000

Q13. Mr. Arnav does not keep proper records of his business he provided following information, you are required to prepare a statement showing the profit or loss for the year.

 
Capital at the beginning of the year15,00,000
Bills receivable60,000
Cash in hand80,000
Furniture9,00,000
Building10,00,000
Creditors6,00,000
Stock in trade2,00,000
Further capital introduced3,20,000
Drawings made during the period80,000

Ascertainment of statement of affairs at the beginning and at the end of the year and calculation of profit or loss.

The solution is as follows:

Books of Mr. ArnavStatement of Affairs at the end of year

LiabilitiesAmountAssetsAmount
Creditors6,00,000Bills Receivable60,000
Capital (Balance figure)16,40,000Cash in Hand80,000
Furniture9,00,000
Building10,00,000
Stock in Trade2,00,000
22,40,00022,40,000

Statement of Profit and Loss

ParticularsAmount
Capital at the end of the year16,40,000
Add: Drawings during the year80,000
Less: Capital at the beginning of the year(15,00,000)
Less: Further capital introduced(3,20,000)
Loss during the year1,00,000

Q14. Mr. Akshat keeps his books on incomplete records following information is given below:

 April 01, 2016March 31, 2017
  ₹
Cash in hand 1,0001,500
Cash at bank 15,00010,000
Stock 1,00,00095,000
Debtors 42,50070,000
Business premises 75,0001,35,000
Furniture 9,0007,500
Creditors 66,00087,000
Bills payable 44,00058,000

During the year he withdrew ₹ 45,000 and introduced ₹ 25,000 as further capital in the business compute the profit or loss of the business.

The solution is as follows:

Books of Mr. AkshatStatement of Affairs as on April 01, 2016

LiabilitiesAmountAssetsAmount
Creditors66,000Cash in Hand1,000
Bills Payable44,000Cash at Bank15,000
Capital (Balancing figure)1,32,500Stock1,00,000
Debtors42,500
Business Premises75,000
Furniture9,000
2,42,5002,42,500

Statement of Affairs as on March 31, 2017

LiabilitiesAmountAssetsAmount
Creditors87,000Cash in Hand1,500
Bills Payable58,000Cash at Bank10,000
Capital (Balancing figure)1,74,000Stock95,000
Debtors70,000
Business Premises1,35,000
Furniture7,500
3,19,0003,19,000

Statement of Profit and Loss as on March 31, 2017

ParticularsAmount
Capital on March 31, 20171,74,000
Add: Drawings made during the year45,000
Less: Capital on April 01, 2016(1,32,500)
Less: Additional capital introduced(25,000)
Profit earned by Mr. Akshat during the year 2016–201761,500

Q15. Gopal does not keep proper books of account. Following information is given below:

 April. 01, 2016March. 31, 2017
  ₹
Cash in hand 18,00012,000
Cash at bank 1,5002,000
Stock in trade 80,00090,000
Sundry debtors 36,00060,000
Sundry creditors 60,00040,000
Loan 10,0008,000
Office equipment 25,00030,000
Land and Building 30,00020,000
Furniture 10,00010,000

During the year he introduced ₹ 20,000 and withdrew ₹ 12,000 from the business. Prepare the statement of profit or loss on the basis of given information

The solution is as follows:

Books of GopalStatement of Affairs as on April 01, 2016

LiabilitiesAmountAssetsAmount
Sundry Creditors60,000Cash in hand18,000
Loan10,000Cash at bank1,500
Stock in trade80,000
Sundry Debtors36,000
Office Equipments25,000
Capital (Balancing figure)1,30,500Land and Buildings30,000
Furniture10,000
2,00,5002,00,500

Statement of Affairs as on March 31, 2017

LiabilitiesAmountAssetsAmount
Sundry Creditors40,000Cash in Hand12,000
Loan8,000Cash at Bank2,000
Stock in Trade90,000
Sundry Debtors60,000
Office Equipments30,000
Capital (Balancing figure)1,76,000Land and Buildings20,000
Furniture10,000
2,24,0002,24,000

Statement of Profit and Loss as on March 31, 2017

ParticularsAmount
Capital on March 31, 20171,76,000
Add: Drawing made during 201712,000
Less: Capital on April 01, 2016(1,30,500)
Less: Additional capital introduced(20,000)
Profit during the year37,500

The profit earned is ₹37,500.

Q16. Mr. Muneesh maintains his books of accounts from incomplete records. His books provide the information:

 April. 01, 2016March. 31, 2017
  ₹
Cash1,2001,600
Bills receivable 2,400
Debtors 16,80027,200
Stock 22,40024,400
Investment –8,000
Furniture 7,5008,000
Creditors14,000 15,200

He withdrew ₹ 300 per month for personal expenses. He sold his investment of ₹ 16,000 at 2% premium and introduced that amount into business.

Statement of Affairs as on April 01, 2016

LiabilitiesAmount ₹AssetsAmount ₹
Creditors14,000Cash1,200
Debtors16,800
Stock22,400
Furniture7,500
Capital (Balancing figure)33,900
47,90047,900

Statement of Affairs as on March 31, 2017

LiabilitiesAmount ₹AssetsAmount ₹
Creditors15,200Cash1,600
Bills Receivable2,400
Debtors27,200
Stock24,400
Capital (Balancing figure)56,400Investment8,000
Furniture8,000
71,60071,600

Statement of Profit and Loss as on March 31, 2017

ParticularsAmount
Capital on March 31, 201756,400
Add: Drawing made during the year (₹ 300 × 12)3,600
Less: Capital on April 01, 2016(33,900)
Less: Additional Capital Introduced(16,320)
Profit earned during the year 20179,780

Working Note:

Additional Capital Introduced = 16,000 × 102
100
= 16,320

Q17. Mr. Girdhari Lal does not keep full double entry records. His balance as on April 01, 2016 is as.

LiabilitiesAmountAssetsAmount
Sundry creditors35,000Cash in hand5,000
Bills payable15,000Cash at bank20,000
Capital40,000Sundry debtors18,000
  Stock22,000
  Furniture8,000
  Plant17,000
 90,000 90,000
    

His position at the end of the year is:

 
Cash in hand7,000
Stock8,600
Debtors23,800
Furniture15,000
Plant20,350
Bills payable20,200
Creditors15,000

He withdrew ₹ 500 per month out of which to spent ₹ 1,500 for business purpose. Prepare the statement of profit or loss.

The solution is as follows:

Books of Mr. Girdhari LalStatement of Affairs as on April 31, 2016

LiabilitiesAmount ₹AssetsAmount ₹
Bills Payable20,200Cash in Hand7,000
Creditors15,000Stock8,600
Capital (Balancing figure)39,550Debtors23,800
Furniture15,000
Plant20,350
74,75074,750

Statement of Profit and Loss

ParticularsAmount
Capital at the end of the year39,550
Add: Drawings (₹ 500 × 12 months)6,000
Less: Capital at the beginning of the year 2016(40,000)
Less: Additional capital introduced(1,500)
Profit earned during the year 20174,050

Q18. Mr. Ashok does not keep his books properly. Following information is available from his books.

 April. 01, 2016March. 31, 2017
  ₹
Sundry creditors 45,00093,000
Loan from wife 66,00057,000
Sundry debtors 22,500
Land and Building 89,60090,000
Cash in hand 7,5008,700
Bank overdraft 25,000
Furniture 1,3001,300
Stock34,00025,000

During the year Mr. Ashok sold his private car for ₹ 50,000 and invested this amount into the business. He withdrew from the business ₹ 1,500 per month up to October 31, 2016 and thereafter ₹ 4,500 per month as drawings. You are required to prepare the statement of profit or loss and statement of affair as on March 31, 2017.

The solution is as follows:

Books of Mr. AshokStatement of Affairs as on April 01, 2016

LiabilitiesAmountAssetsAmount
Sundry Creditors45,000Sundry Debtors22,500
Loan from Wife66,000Land and Building89,600
Bank Overdraft25,000Cash in Hand7,500
Capital (Balancing figure)18,900Furniture1,300
Stock34,000
1,54,9001,54,900

Statement of Affairs as on March 31, 2017

LiabilitiesAmountAssetsAmount
Sundry Creditors93,000Land and Building90,000
Loan from Wife57,000Cash in Hand8,700
Furniture1,300
Stock25,000
Capital (Balancing figure)25,000
1,50,0001,50,000

Statement of Profit and Loss

ParticularsAmount
Capital on March 31, 2017(25,000)
Add: Drawings (₹ 1,500 × 7 months) + (4,500 × 5 months)33,000
Less: Capital on April 01, 2016(18,900)
Less: Additional capital introduced (sale of car)(50,000)
Loss during the year 2017(60,900)

The loss during the year 2017 is ₹ 60,900

Q19. Krishna Kulkarni has not kept proper books of accounts prepare the statement of profit or loss for the year ending December 31, 2011 from the following information:

 April. 01, 2016March. 31, 2017
  ₹
Cash in hand 10,00036,000
Debtors 20,00080,000
Creditors 10,00046,000
Bills receivable 20,00024,000
Bills payable 4,00042,000
Car –80,000
Stock 40,00030,000
Furniture 8,00048,000
Investment 40,00050,000
Bank balance 1,00,00090,000

The following adjustments were made:

(a) Krishna withdrew cash ₹ 5,000 per month for private use.

(b) Depreciation @ 5% on car and furniture @10%.

(c) Outstanding Rent ₹ 6,000.

(d) Fresh Capital introduced during the year ₹ 30,000.

The solution is as follows:

Books of Krishna KulkarniStatement of Affairs as on April 01, 2016

LiabilitiesAmountAssetsAmount
Creditors10,000Cash in Hand10,000
Bills Payable4,000Debtors20,000
Bills Receivable20,000
Stock40,000
Furniture8,000
Investment40,000
Capital (Balancing figure)2,24,000Cast at Bank1,00,000
2,38,0002,38,000

Statement of Affairs as on March 31, 2017

Statement of Profit and Loss

ParticularsAmount
Capital on March 31, 20173,35,200
Add: Drawings made during the year (₹ 5,000 × 12 months)60,000
Less: Capital on April 01, 2016(2,24,000)
Less: Fresh capital introduced during the year(30,000)
Profit earned during the year 20171,41,200

Q20. M/s Saniya Sports Equipment does not keep proper records. From the following information find out profit or loss and also prepare balance sheet for the year ended March 31, 2017

 April. 31, 2016March. 31, 2017
Cash in hand6,00024,000
Bank overdraft30,000
Stock50,00080,000
Sundry creditors26,00040,000
Sundry debtors60,0001,40,000
Bills payable6,00012,000
Furniture40,00060,000
Bills receivable8,00028,000
Machinery50,0001,00,000
Investment30,00080,000

Drawing ₹ 10,000 p.m. for personal use, fresh capital introduce during the year ₹ 2, 00,000. A bad debts of ₹ 2,000 and a provision of 5% is to be made on debtors outstanding salary ₹ 2,400, prepaid insurance ₹ 700, depreciation charged on furniture and machine @ 10% p.a.

The solution is as follows:

Statement of Affairs as on April 31, 2016

LiabilitiesAmountAssetsAmount
Bank Overdraft30,000Cash in Hand6,000
Sundry Creditors26,000Stock50,000
Bills Payable6,000Sundry Debtors60,000
Furniture40,000
Bills Receivable8,000
Machinery50,000
Capital (Balancing figure)1,82,000Investment30,000
2,44,0002,44,000

Statement of Affairs as on March. 31, 2017

Statement of Profit and Loss

ParticularsAmount
Capital on March 31, 20174,33,400
Add: Drawings made during the year (₹ 10,000 × 12)1,20,000
Less: Capital on April 31, 2016(1,82,000)
Less: Fresh capital introduced during the year(2,00,000)
Profit earned during the year 20171,71,400

Profit earned during the year 2017 is ₹1,71,400

Q21. From the following information calculate the amount to be paid to creditors:

 
Sundry creditors as on March 31, 20171,80,425
Discount received26,000
Discount allowed24,000
Return outwards37,200
Return inward32,200
Bills accepted1,99,000
Bills endorsed to creditors26,000
Creditors as on April 01, 20162,09,050
Total purchases8,97,000
Cash purchases1,40,000
The solution is as follows:

Creditors Account

Dr Cr.

ParticularsAmountParticularsAmount
Discount Received26,000By Balance b/d1,80,425
Return Outwards37,200Purchases – credit
Bills accepted1,99,000(8,97,000 – 1,40,000)7,57,000
B/R (endorsed to creditors)26,000
Balance c/d2,09,050
Cash/Bank (Balancing figure)4,40,175
9,37,4259,37,425

Amount paid to Creditors is ₹ 4, 40,175.

Q22. Find out the credit purchases from the following:

 
Balance of creditors April 01, 201645,000
Balance of creditors March 31, 201736,000
Cash paid to creditors1,80,000
Cheque issued to creditors60,000
Cash purchases75,000
Discount received from creditors5,400
Discount allowed5,000
Bills payable given to creditors12,750
Return outwards7,500
Bills payable dishonoured3,000
Bills receivable endorsed to creditors4,500
Bills receivable endorsed to creditors dishonoured1,800
Return inwards3,700

Creditors Account

Dr Cr.

ParticularsAmountParticularsAmount
Cash1,80,000Balance b/d45,000
Bank60,000B/P (dishonoured)3,000
Discount Received5,400B/R (dishonoured)1,800
B/P (accepted)12,750
Return Outwards7,500Purchases – credit
B/R (endorsed to creditors)4,500(Balancing figure)2,56,350
Balance c/d36,000
3,06,1503,06,150

Therefore the Credit Purchases are amounting to ₹ 2, 56,350

Q23. From the following information calculate total purchases.

 
Creditors April. 01, 201630,000
Creditors March. 31, 201720,000
Opening balance of Bills payable25,000
Closing balance of Bills payable35,000
Cash paid to creditors1,51,000
Bills discharged44,500
Cash purchases1,29,000
Return outwards6,000

Creditors Account

Dr Cr.

ParticularsAmountParticularsAmount
Cash1,51,000Balance b/d30,000
Return Outwards6,000Purchases – credit2,01,500
Bills Payable (accepted)54,500(Balancing figure)
Balance c/d20,000
2,31,5002,31,500

Bills Payable Account

Dr Cr.

ParticularsAmount ₹ParticularsAmount ₹
Cash (Bills discharged)44,500Balance b/d25,000
Creditors – (Bills Payableaccepted) (Balancing figure)54,500
Balance c/d35,000
79,50079,500
Total Purchases= Cash Purchases + Credit Purchases (as per Creditors Account)
= 1,29,000 + 2,01,500
= ₹ 3,30,500

Q24.The following information is given

 
Opening creditors60,000
Cash paid to creditors30,000
Closing creditors36,000
Returns Inward13,000
Bill matured27,000
Bill dishonoured8,000
Purchases return12,000
Discount allowed5,000

Calculate credit purchases during the year

The solution is as follows:

Creditors Account

Dr Cr.

ParticularsAmountParticularsAmount
Cash30,000Balance b/d60,000
Purchases Return12,000B/P (dishonoured)8,000
B/P (accepted) (see note)27,000By Purchases – credit37,000
Balance c/d36,000(Balancing figure)
1,05,0001,05,000

Note: The return inwards and discount allowed belong to the Debtors account. So, it is not considered in the creditors account.

Q25. From the following, calculate the amount of bills accepted during the year.

Bills payable as on April 01, 2016 1, 80,000

Bills payable as on March 31, 2017 2, 20,000

Bills payable dishonoured during the year 28,000

Bills payable honoured during the year 50,000

The solution is as follows:

Bills Payable Account

Dr Cr.

ParticularsAmountParticularsAmount
Creditors (dishonoured)28,000Balance b/d1,80,000
Cash/Bank50,000Creditors (acceptance)1,18,000
Balance c/d2,20,000(Balancing figure)
2,98,0002,98,000

Q26. Find out the amount of bills matured during the year on the basis of information given below;

 
Bills payable dishonoured37,000
Closing balance of Bills payable85,000
Opening balance of Bills payable70,000
Bills payable accepted90,000
Cheque dishonoured23,000

The solution is as follows:

Bills Payable Account

Dr Cr.

ParticularsAmountParticularsAmount
Creditors (Bill dishonoured)37,000Balance b/d70,000
Cash/Bank (Balancing figure)38,000Creditors – acceptance90,000
Balance c/d85,000(Balancing figure)
1,60,0001,60,000

Therefore the Bill Payable matured during the year is ₹ 38,000.

Q27. Prepare the bills payable account from the following and find out missing figure if any:

 
Bills accepted1,05,000
Discount received17,000
Purchases returns9,000
Return inwards12,000
Cash paid to accounts payable50,000
Bills receivable endorsed to creditor45,000
Bills dishonoured17,000
Bad debts14,000
Balance of accounts payable (closing)85,000
Credit purchases2,15,000

The solution is as follows:

Bills Payable Account

Dr Cr.

ParticularsAmountParticularsAmount
Creditors (Bills dishonoured)17,000Creditors (acceptance)1,05,000
Cash/Bank (Balancing figure)88,000
1,05,0001,05,000

Account Payable Account

Dr Cr.

ParticularsAmountParticularsAmount
Discount Received17,000Purchases – Credit2,15,000
Purchases Return9,000B/P (dishonoured)17,000
Cash50,000
B/R (endorsed)45,000Balance b/d79,000
B/P (acceptance)1,05,000(Balancing figure)
Balance c/d85,000
3,11,0003,11,000

Bills payable discharged is ₹ 88,000 and the opening balance of creditors is ₹ 79,000.

Q28. Calculate the amount of bills receivable during the year.

 
Opening balance of bills receivable75,000
Bill dishonoured25,000
Bills collected (honoured)1,30,000
Bills receivable endorsed to creditors15,000
Closing balance of bills receivable65,000

The solution is as follows:

Bills Payable Account

Dr Cr.

ParticularsAmountParticularsAmount
Balance b/d75,000Debtors (B/R dishonoured)25,000
Cash/Bank (honoured)1,30,000
Creditors (endorsed)15,000
Debtors (B/R received)1,60,000Balance c/d65,000
(Balancing figure)
2,35,0002,35,000

Therefore, the Bills receivable received from Debtors ₹ 1, 60,000.

Q29. Calculate the amount of bills receivable dishonoured from the following information.

 
Opening balance of bills receivable1,20,000
Bills collected (honoured)1,85,000
Bills receivable endorsed22,800
Closing balance of bills receivable50,700
Bills receivable received1,50,000

The solution is as follows:

Bills Payable Account

Dr Cr.

ParticularsAmountParticularsAmount
Balance b/d1,20,000Cash/Bank (honoured)1,85,000
Creditors (endorsed)22,800
Balance c/d50,700
Debtors (B/R received)1,50,000Debtors (dishonoured)11,500
(Balancing figure)(Balancing figure)
2,70,0002,70,000

So the Bills Receivable dishonoured is ₹ 11,500.

Q30. From the details given below, find out the credit sales and total sales.

 
Opening debtors45,000
Closing debtors56,000
Discount allowed2,500
Sales returns8,500
Irrecoverable amount4,000
Bills receivables received12,000
Bills receivable dishonoured3,000
Cheque dishonoured7,700
Cash sales80,000
Cash received from debtors2,30,000
Cheque received from debtors25,000

The solution is as follows:

Debtors Account

Dr Cr.

ParticularsAmountParticularsAmount
Balance b/d45,000Discount Allowed2,500
B/R (dishonoured)3,000Sales Returns8,500
Bank (cheque dishonoured)7,700Bad-debts (irrecoverable amount)4,000
Sales – Credit2,82,300B/R (received)12,000
(Balancing figure)Cash2,30,000
Bank25,000
Balance c/d56,000
3,38,0003,38,000

Credit sales is ₹ 2, 82,300

Total Sales= Cash Sales + Credit Sales
= 80,000 + 2,82,300
= ₹ 3,62,300

Q31. From the following information, prepare the bills receivable account and total debtors account for the year ended March 31, 2017.

 
Opening balance of debtors1,80,000
Opening balance of bills receivable55,000
Cash sales made during the year95,000
Credit sales made during the year14,50,000
Return inwards78,000
Cash received from debtors10,25,000
Discount allowed to debtors55,000
Bills receivable endorsed to creditors60,000
Cash received (bills matured)80,500
Irrecoverable amount10,000
Closing balance of bills receivable on March. 31, 201775,500

The solution is as follows:

Debtors Account

Dr Cr.

ParticularsAmountParticularsAmount
Balance b/d1,80,000Return Inwards78,000
Sales—Credit14,50,000Discount Allowed55,000
Cash10,25,000
Bad debt (irrecoverable amount)10,000
B/R (received)1,61,000
Balance c/d3,01,000
(Balancing figure)
16,30,00016,30,000

Bills Receivable Account

Dr Cr.

ParticularsAmountParticularsAmount
Balance b/d55,000Cash (Bills matured)80,500
Creditors (endorsed)60,000
Balance c/d75,500
Debtors (received)
(Balancing figure)
1,61,000
2,16,0002,16,000

The missing figure in the bills receivable account–B/R received from debtors’ is ₹ 1, 61,000 and the missing figure in the debtors account–closing balance is ₹ 3, 01,000.

Q32. Prepare the suitable accounts and find out the missing figure if any.

 
Opening balance of debtors14,00,000
Opening balance of bills receivable7,00,000
Closing balance of bills receivable3,50,000
Cheque dishonoured27,000
Cash received from debtors10,75,000
Cheque received and deposited in the bank8,25,000
Discount allowed37,500
Irrecoverable amount17,500
Returns inwards28,000
Bills receivable received from customers1,05,000
Bills receivable matured2,80,000
Bills discounted65,000
Bills endorsed to creditors70,000

The solution is as follows:

Debtors Account

Dr Cr.

ParticularsAmountParticularsAmount
Balance b/d14,00,000Cash10,75,000
Bank (cheque dishonoured)27,000Bank8,25,000
B/R (dishonoured)40,000Discount Allowed37,500
Bad debt (irrecoverable amount)17,500
Return Inwards28,000
Sales—Credit (Balancing figure)6,21,000B/R (received)1,05,000
20,88,00020,88,000

Bills Receivable Account

Dr Cr.

ParticularsAmountParticularsAmount
Balance b/d7,00,000Cash (B/R matured)2,80,000
Bank (Bill endorsed)65,000
Creditors (endorsed)70,000
Debtors (B/R received)1,05,000Balance c/d3,50,000
Debtors (dishonoured)40,000
(Balancing figure)
8,05,0008,05,000

As per solution, the missing figure in the bills receivable account is B/R dishonoured of ₹ 40,000. The missing figure in the debtors account is the credit sales of ₹ 6, 21,000.

Concepts covered in this chapter –

  • Meaning of incomplete records
  • Features of incomplete records
  • Reasons of incompleteness and its limitations
  • Ascertainment of profit and loss
  • Preparing statement of affairs
  • Difference between statement of affairs and balance sheet
  • Preparing trading and profit and loss account and the balance sheet
  • Ascertaining credit purchases
  • Ascertainment of credit sales
  • Ascertainment of missing information through summary of cost

FAQ:

1. What is Adjusted closing capital under Single Entry system

A: Under single entry system adjusted capital means closing capital adjusted with drawings and additional capital called additional capital [Closing capital + Drawings — Additional Capital = Adjusted capital)

2. Write the Balance Sheet Equation.

A: Balance Sheet Equation.
Assets = Capital + Liability.

3. Define Single Entry System

A: Prof: Eric Kholar defines a Single Entry System as “a system of bookkeeping in which as a rule, only records of cash and persons are maintained; it is always in complete double entry, varying with circumstances”.

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