Accounts from Incomplete Record Test - 7

calculation of profit during the year:-

       Capital at the end of the year i.e., 31 Dec. 2001  –  Rs.2, 00,000

less:  Capital brought in by the proprietor during the year  – Rs.50,000

less: Capital at the beginning of the year i.e., 1 Jan. 2001  – Rs.1,20,000

add: Withdrawals by the proprietor during the Year   – Rs.30,000

profit   – Rs.60000

If opening or closing capitals aren't given then opening or closing statement of affairs needs to be prepared to calculate capitals. a statement of affairs is a statement of all assets and liabilities. The difference between the amount of the two sides is taken as capital. A statement of affairs is just like the balance sheet.

calculation of profit:-

Opening capital:  –  Rs.120000

less: closing capital – Rs.180000

less: Drawings – Rs.10000

add: capital added during the year  –  Rs.20000

profit   – Rs50,000

calculation of profit:-

Opening capital   – Rs.36000

less: closing capital  – Rs.54000

less: Drawings – Rs.3000

add: capital added during the year – Rs.6000.

profit –  Rs.15,000

Debtor Balance as on 31/03/2012  –  Rs.49000

add: bank   – Rs.141400

less; Debtor Balance as on 1/04/2011 – Rs.50400

   sale  – 140000

under single entry system, only personal accounts are maintained and real and nominal accounts are avoided. and also cash book is maintained which mixes up business as well as private transactions.

calculation of credit purchase:-

        closing balance of debtor – 48000

add: cash paid to the creditor – 240000

add: cheque paid to the creditor – 80000

add: return outward – 10000

add; discount received – 7200

add: B/P issued – 17000

less: B/P dishonored – 4000

add: B/R  endorsed – 6000

less: B/R endorsed dishonored – 2400

less: closing balance of debtor –  60,000

credit purchase –  341800

calculation of capital:-

fixed assets + current assets = current liabilities + capital

5225+ 9653 = 3718 + capital

capital = 11160

Paid to creditors  – Rs.21096

add: discount received – Rs.190

add: Contra – Rs. 609

add: cash purchases – Rs.207

less: creditors taken over – Rs.994

add:  Closing balance of creditors – Rs.1289

purchase – Rs.22397

let profit be x,

cash + stock + debtor + plant = capital on 31 december, 2012 + creditor + loan from friend

320 + 3480 + 3100 + 8500 = (capital on 1 january, 2012 - drawing + profit) + 1200 + 1000

(capital on 1 january, 2012 - drawing + profit) = 13200

(10000 - 2400 + x ) = 13200

x = 5600

hence, profit is Rs.5600.

calculation of capital on 31 december, 2012

cash + stock + debtor + plant = capital + creditor + loan

320 + 3480 + 3100 + 8500 = capital + 1200 + 1000

capital = 13200

calculation of net profit:-

gross profit – 3950

less: provision for doubtful debts – 320

less: interest on the loan –  90

net profit –  3540

in 'accounts from incomplete records system' sometimes for certain transaction both aspects are recorded, for others one aspects are recorded and some transactions are not even recorded. therefore it is an unscientific system of accounting.

single entry system is not recognised by tax authorities because income tax Act 1961, imposes a legal restriction on the preparation of accounting books based on single entry system.

statement of affairs looks a like balance sheet but indeed it is different from the balance sheet in many ways. like the statement of affairs does not prove in any sense the arithmetical accuracy of the accounting since it is prepared from incomplete records.

calculation of capital at the beginning-

capital at the end  – Rs.16000

less: Capital introduced during the year  – Rs.4000

less:  profit made during the year – Rs.4800

add: drawings –  Rs.2400

capital at the beginning –  Rs.9600

Debtors on April 01,2005  – RS. 50,000

less: Debtors on March 31, 2005 – Rs.70,000

less: Cash received from debtors – Rs.60,000

less: Discount allowed – Rs.1,000

less: Bills receivable – Rs.30,000

less: Bad debts –  Rs.3,000.

total sale – Rs. 1,14,000

alternatively, it can be calculated through debtor A/C.

computation of closing owers equity:-

opening owners equity  –  21000

add: fress capital   –  7000

less: drawing  – 13000

add: profit – 12000

closing owners equity  –   27000

single entry system is suitable for small businesses because they neither want to engage in the complexities of double entry system nor they have enough money to install a double entry system of accounting.

calculation of closing creditor

Balance of creditors on 1st Jan, 2012 –  Rs.60,000

less: Cash paid to creditors  – Rs.2,40,000

less: Cheques issued to creditors – Rs.80,000

 less: Returns outwards – Rs.10,000

less: Discount received from creditors – Rs.7,200

less:  B/P given to creditors – Rs.17,000

add:  B/P dishonored  Rs.4,000

Capital at the end of the year  –  Rs.4, 00,000

add Drawings made during the year – Rs.60,000

less: Fresh Capital introduce during the year – (Rs .1, 00,000)

less: Profit of the current year –   (Rs.1,00,000)

Capital at the beginning of the year –  Rs. 2,60,000

payment of income tax on owners income is the owner's liability. and if it is paid by the business it is treated as drawing.

calculation of capital at the beginning:-

capital at the end  – Rs.36000

less: Capital introduced during the year  – Rs.6000

add: drawings – Rs.8000

add:  loss during the year –  Rs.2000 

capital at the beginning – Rs.40000

calculation of profit:-

capital at the end – Rs.187000

less: additional capital – Rs.20400

less: capital at the beginning – Rs.192000

add: drawing –  Rs.84200

profit –  Rs.58800

if credit purchase isn't given it can be calculated by preparing creditor A/C. the balancing figure in the creditor A/C shall be considered as the credit purchase.