Q.5. Radheshyam a retail trader had no proper methods accounting but the following but the following information is made available to you, you are required to prepare opening and closing statement of Affairs and Statement showing Profit or Loss for the year ended 31stMarch, 2007 after taking into consideration the adjustments.
| Particulars | Amount (`.) 01.04.2006 | Amount (`.) 31.03.2007 |
| Sundry Debtors | 22,500 | 25,000 |
| Sundry Creditors | 30,000 | 35,000 |
| Bank overdraft | 40,000 | 20,000 |
| Stock | 32,500 | 40,000 |
| Cash in Hand | 1,000 | 4,000 |
| Bill Receivable | 30,000 | 40,000 |
| Furniture | 5,000 | 5,000 |
| Motor Van | 40,000 | 40,000 |
| Computer | 30,000 | 60,000 |
Adjustments:-
(1) On 1st October, 2006 Mr. Radheshyam had withdrawn `.25,000 for personal use out of which he invested `. 5,000 at par on the same day in 10% Municipal Bonds which is treated as business assets.
(2) He had also withdrawn `. 15,000 for his daughter’s marriage.
(3) Depreciate Furniture by 10% p.a. and write off `.1,000 from motor van.
(4) As regards debtors `.1,000 is irrecoverable and further reserve of 5% is to be made on debtors.
(5) Allow interest on Capital at 10% p.a.
(6) Charge interest on Drawing `. 1,000. (10)
In the books of Radheshyam
Opening Statement of Affairs as on 1.4.2006
| Liabilities | Rs. | Assets | Rs. |
| Capital Sundry Creditors Bank Overdraft | 91,000 30,000 40,000 | Sundry Debtors Stock Cash in hand Bills Receivable Furniture Motor Van Computers | 22,500 32,500 1,000 30,000 5,000 40,000 30,000 |
| | 1,61,000 | | 1,61,000 |
Closing Statement of Affairs as on 31.3.2007
| Liabilities | Rs. | Rs. | Assets | Rs. | Rs. |
| Capital Sundry Creditors Bank Overdrafts | | 1,60,550 35,000 20,000 | Sundry Debtors Less: New Bad debts Less: New R.D.D. Stock Cash in hand Bills Receivable Furniture Less: Depreciation Motor Van Less: Written off Computers 10% Municipal Bonds Add: Interest | 25,000 1,000 24,000 1,200 5,000 500 40,000 1,000 5,000 250 | 22,800 40,000 4,000 40,000 4,500 39,000 60,000 5,250 |
| | | 2,15,550 | | | 2,15,550 |
Statement of profit or loss as on 31.3.2007
| Particulars | Rs. | Rs. |
| Capital at the end of the year Add: (1) Drawings (20,000 + 15,000) (2) Interest on Drawings | 35,000 1,000 | 160550 36,000 |
| Less: (1) Further capital introduced (2) Interest on capital | - 9,100 | 1,96,550 9,100 |
| Less: Capital at the beginning of the year | | 1,87,450 91,000 |
| Net Profit | | 96,450 |
Working Note: Interest on Drawings is directly given in the problem, so there is no need to consider average interest.