Question No 19 Chapter No 8
On 1st April 2018 the position of Tendulkar was as follows: Stock in trade Rs 2,88,000; Bills Payable Rs 48,000: Cash in Bank Rs 2,16,000; Plant and Machinery Rs 1,20,000; Owing by Debtors Rs 60,000; Owing to Creditors Rs 96,000; Investment Rs 2,40,000. Loan from S.K. Garg Rs 1,80,000. What was the amount of Tendulkar’s capital on the date ? Show an opening Journal entry.
Solution of Question No 19 Chapter No 8: –
So to solve this question first we have to prepare the working Note shown as below:
To Calculate the amount of capital we should use the following formula.
“Capital = Total Assets – Total Liabilities”
To apply this formula we have to recognise the assets and liabilities accounts first. This is shown below: –
|Name of Accounts||Type of Account||Debit/ Credit||Reason of Debit/Credit|
|Stock in Trade A/c||Asset||Debit||All assets always have debit balance.|
|Bills Payable A/c||Liability||Credit||B/P is Liability for the business So, All Liabilities are always have Credit balance|
|Cash at Bank A/c||Asset||Debit||All assets always have debit balance|
|Plant & Machinery A/c||Asset||Debit||All assets always have debit balance|
|Qwing by debtors (Sundry Debtors)||Asset||Debit||All assets always have debit balance|
|Owing to creditors (Sundry Creditors)||Liability||Credit||All Liabilities are always have Credit balance|
|Investment A/c||Asset||Debit||All assets always have debit balance|
|Loan From S.K. Garg||Liability||Credit||All Liabilities are always have Credit balance|
Note: You did not need to prepare above table in the exam, Because this is just for your understanding.
Total Assets = 288000+216000+120000+60000+240000
Total Assets = 9,24,000/-
Total Liabilities = 48000+96000+180000
Total Liabilities = 3,24,000/-
Capital = 9,24,000- 3,24,000
Capital = 6,00,000/- Ans.
Now Post this in the Journal day book: –
In the Books of Rahman
|1st April,2018||Stock in Trade A/c||Dr.||2,88,000|
|Cash at Bank A/c||Dr.||2,16,000|
|Plant & Machinery A/c||Dr.||1,20,000|
|Sundry Debtors A/c||Dr.||60,000|
|To Bills Payable A/c||48,000|
|To Sundry Creditors A/c||96,000|
|To S.K. Garg Loan’s A/c||1,80,000|
|To Capital A/c(See W.Note)||6,00,000|
|(Being opening balances of last year brought forward in current year )|
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