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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Question No 19 Chapter No 19
19. C maintains his books according to Single Entry System. Following figures were available from the books for the six months ended 31 st December 2017:
| Particulars | 1st July, 2017 | 31st Dec. 2017 |
| Plant and Machinery | 1,50,000 | 1,40,000 |
| Debtors | 65,000 | 60,000 |
| Cash and Bank Balances | 25,000 | 31,000 |
| Stock | 40,000 | 45,000 |
| Creditors | 9,000 | 10,000 |
Adjustments:
a. He had withdrawn 200 in the beginning of every month for household purposes.
b .Depreciation on Plant and Machinery @ 10% p.a.
c . Further Bad Debts 5,000 and Provision for Doubtful Debts to be created @ 2%.
d . During the period, salaries have been prepaid by 500 while wages outstanding were 1,000.
e. Interest on drawings to be reckoned @ 6% p.a. You are required to prepare the Statement of Profit or Loss for the half year ended 31 st December, 2017, followed by Revised Statement of Affairs as on that date.
Statement of Affairs as on July 01,2017
| Liabilities |
Amount | Assets | Amount | ||
|---|---|---|---|---|---|
| Creditors | 9,000 | Cash and Bank balances | 25,000 | ||
| Debtors | 65,000 | ||||
| Stock | 40,000 | ||||
| Plant and Machinery | 1,50,000 | ||||
| Capital | 2,71,000 | ||||
| 2,80,000 | 2,80,000 | ||||
Statement of Affairs as on December 31,2017
| Liabilities |
Amount | Assets | Amount | ||
|---|---|---|---|---|---|
| Creditors | 10,000 | Cash and Bank balances | 31,000 | ||
| Outstanding Wages | 1,000 | Debtors | 60,000 | ||
| Stock | 45,000 | ||||
| Plant and Machinery | 1,40,000 | ||||
| Prepaid Salary | 500 | ||||
| Capital | 2,65,500 | ||||
| 2,76,500 | 2,76,500 | ||||
Statement of Profit or Loss for the half year ended December 31,2017
| Particular |
Amount | |
|---|---|---|
| Capital at the end of the year | 2,65,500 | |
| Add: Drawings made during the year | 1,200 | |
| Adjusted capital at the end of the year | 2,66,700 | |
| Less: Capital in the beginning of the year | 2,71,000 | |
| Gross Loss Profit before Adjustment | 4,300 | |
| Less: Interest on Drawings | 21 | |
| Add: Depreciation on Plant and Machinery | 7,000 | |
| Bad Debt | 5,000 | |
| Provision for Doubtful Debts | 1,100 | |
| Net Loss Profit After Adjustment | 17,379 | |
Statement of Affairs After adjustments as on December 31, 2017
| Liabilities |
Amount | Assets | Amount | ||
|---|---|---|---|---|---|
| Creditors | 10,000 | Cash and Bank balances | 31,000 | ||
| Outstanding Wages | 1,000 | Stock | 45,000 | ||
| Capital | 2,71,000 | Debtors | 60,000 | ||
| Less: Net Loss | 17,379 | Less: Bad Debts | 5,000 | ||
| Less: Drawings | 1,200 | Less: Provision for D.D. | 1,100 | 53,900 | |
| Less: Interest on Drawings | 21 | 2,52,400 | Plant and Machinery | 1,40,000 | |
| Less: Depreciation | 7,000 | 1,33,000 | |||
| Prepaid Salary | 500 | ||||
| 2,63,400 | 2,63,400 | ||||
Working Notes
To calculate the Amount of Deprecation charged on Plant and Machinery
Depreciation = Value of Asset X Rate of Depreciation X Period
Value of Asset = 1,40,000
Rate of Depreciation = 10%
Period = from 01/07/2017 to 31/12/2017 i.e.6months
(from the date of purchase/Beginning balance to end of the financial year)
=1,40,000 X10/100 X 6/12
Depreciation = 7,000
The calculation of Amount of Provision for Doubtful Debts
Provision for Doubtful Debts= Sundry Debtors – Further Bad Debts X Rate of Provision
Sundry Debtors = 60,000
Rate of Provision = 2%
60,000 -5,000 X2/100
Provision For Doubtful Debts= 1,100
Calculation of Amount of Interest on Drawings:
| Date |
Amount | Months | Product |
|---|---|---|---|
| Jul. 01, 2017 | 200 | 6 | 1,200 |
| Aug. 01, 2017 | 200 | 5 | 1,000 |
| Sep. 01, 0217 | 200 | 4 | 800 |
| Oct. 01, 0217 | 200 | 3 | 600 |
| Nov. 01, 2017 | 200 | 2 | 400 |
| Dec. 01, 2017 | 200 | 1 | 200 |
| Total | 4,200 | ||
Interest on Drawings
4,200 X6/100 X 1/12
Interest on Drawing = 21
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Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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