Page 248 - ISCDEBK-XI

22.6 Double Entry Book Keeping—ISC XI
Illustration 3.
Nikita after retirement from service started on 1st July, 2021 a business of fancy goods with
a capital of 1,15,000 out of her gratuity receipts. She keeps her books under the single entry
system. She submits following particulars of her business as on 31st March, 2022:
`
Furniture 18,000
Machinery 24,000
10% Investments 21,000
Debtors 34,000
Creditors 19,000
Closing Stock 20,600
Cash in Hand 11,700
Balance as per the Bank Pass Book 20,400
The following adjustments are to be made:
(i) An advance of ` 700 paid to an employee against his salary that will be due in April,
2022 has now been identified.

(ii) Investment was made on 1st August, 2021 and interest not yet received.
(iii) Business travelling included the proprietor’s personal travelling for which she is to be
charged ` 1,750.
(iv) Stationery of ` 1,480 was consumed by the family members of Nikita.
(v) Cheques amounting to ` 1,900 drawn in favour of suppliers, but not yet presented for
payment.
(vi) An amount of ` 28,000 was withdrawn by Nikita from the business for her personal use,
but out of the said fund she purchased a computer at ` 15,000 for her business use.
(vii) Depreciate machinery and furniture by ` 2,500 and ` 1,400 respectively.
(viii) Out of the debtors, ` 900 is to be written off as bad debts and provision for doubtful
debts is to be created @ 5% on debtors.
You are required to show the Statement of Profit or Loss for the year ended 31st March, 2022
and the final Statement of Affairs as on that date.
Solution: STATEMENT OF AFFAIRS (Before Adjustment)
as at 31st March, 2022
Liabilities ` Assets `

Capital (Balancing Figure) 1,45,000 Machinery 24,000
(Being the excess of Assets over Liabilities) Furniture 18,000
Creditors 19,000 Computer 15,000
10% Investments 21,000
Debtors (` 34,000 – ` 900) 33,100
Closing Stock 20,600
Accrued interest on Investment 1,400
Prepaid Salaries 700
Cash at Bank (` 20,400 – ` 1,900) 18,500
Cash in Hand 11,700
1,64,000 1,64,000