Page 244 - ISCDEBK-XI

22.2 Double Entry Book Keeping—ISC XI

Solved Questions

Illustration 1.

Ashok does not maintain his accounts on complete double entry system. He started his business
with Cash ` 36,000, Furniture ` 32,000, Stock ` 18,000, and Machinery ` 60,000 on 1st April,
2021. His position on 31st March, 2022 was as follows:

Stock in Trade ` 27,000, Cash in Hand ` 22,600, Debtors ` 42,000, Creditors ` 23,000, Loan from
Ganesh ` 14,000, Computer ` 25,000 and Stationery Stock ` 1,400.

Additional Information:
(i) Machinery of ` 26,000 and Furniture of ` 18,000 (excluding household furniture) were
purchased during the year on 1st July, 2021 and on 31st October, 2021 respectively.
Depreciation @ 10% p.a. is to be charged on the above assets.

(ii) A bank loan of ` 28,000 was taken on 1st April, 2021 for purchasing various fixed assets.
Interest charged by the bank for the said loan amounting to ` 980 not yet paid.
(iii) Out of the debtors ` 1,600 is to be written off as bad debt and provision for doubtful debt
is to be created @ 5% on debtors.
(iv) Cash withdrawn from the business for personal use ` 20,000.

(v) Household furniture was purchased for ` 4,000 but payment was made through
business cash.
(vi) Life Insurance Policy of the proprietor matured and the amount was brought into
business ` 25,000.

You are required to prepare a Statement of Profit or Loss for the period ended 31st March, 2022
and a Statement of Affairs as on that date.

Solution: STATEMENT OF AFFAIRS (Before Adjustments)
as at 31st March, 2022
Liabilities ` Assets `

Capital (Balancing Figure) 1,89,000 Machinery (` 60,000 + ` 26,000) 86,000
(being the excess of assets over liabilities) Furniture (` 32,000 + ` 18,000) 50,000
Creditors 23,000 Debtors 42,000
Loan from Ganesh 14,000 Computer 25,000
Bank Loan 28,000 Closing Stock 27,000
Stationery Stock 1,400
Cash in Hand 22,600
2,54,000 2,54,000