KS Academy Accounting

Single Entry

COMPARISION METHOD CHALLENGES:

1. The Statement of Affairs of Sri S. Roy as on 1st April, 2014 is given below:

Liabilities Rs. Assets Rs.

Sundry Creditors 16,500 Cash 7,450
Accrued expenses 3,500 Sundry Debtors 25,350
Capital 50,000 Stock 30,300
Furniture 6,900
70,000 70,000
During the year ended 31 March, 2015 his drawing amounted to Rs. 15,000. He
st

also withdrew goods worth Rs. 600 for his personal use. On 1 st July, 2014, S. Roy
transferred some of his household furniture to the business at a value of Rs. 2,100.
His assets and liabilities as on 31st March, 2015 were:

Liabilities Rs. Assets Rs.

Sundry Creditors 18,600 Cash 6,580
Accrued expenses 4,300 Sundry Debtors 36,900
Stock 40,320
Furniture 9,000
Prepaid Rent 400
Furniture is to be depreciated @ 10% p.a. and a provision is to be created on debtors,
@ 5%, Interest 5% to be allowed on capital as at the beginning of the year. Ascertain
the profit or loss for the year ended 31st March, 2015 and prepare the Statement of
Affairs as on that date.
2. Mr. Kothari does not keep complete records of his business but gives you the
following information :
His assets on 31.03.2015 consisted of Machineries Rs. 1,50,000; Furniture Rs.
60,000; Motorcar Rs. 40,000; Stock – in- trade Rs. 50,000; Debtors Rs. 80,000 ;
Cash in hand Rs. 12,000 and Cash at Bank Rs.30,000; Creditors on that date
amounted to Rs. 1,20,000.
On further information received, you come to know that:
On 1.10.2014 he purchased a new machinery costing Rs. 50,000.
Sales are made for cash as well as on credit. There is no cash purchases. He always
sells his goods at cost plus 25%. Cash sales for the year 2014- 2015 were accounted
for Rs.80,000.

CA – Intermediate 1
 KS Academy Accounting

During the year 2014 -15 collection from debtors amounted to Rs. 5,00,000 and a
sum of Rs.4,25,000 was paid to creditors. He obtained a Bank loan for Rs. 50,000 on
1.02.2014. The entire amount was repaid in February, 2015 with interest Rs. 2,500.
In November, 2014 his life insurance policy for Rs. 50,000 became matured and the
same was invested in the business. His drawings were Rs. 2,500 p.m. all through the
year.
On 1.4.2014 he had Rs. 1,500 as cash in hand and balance at bank for Rs.40,000.
Debtors and Creditors on that date amounted to Rs. 60,000 and Rs.90,000
respectively.
Provide depreciation on Machineries @ 15% p.a. on Furniture @ 10% p.a. and on
Motor Car @ 20% p.a.
Mr. Kothari requests you to prepare a statement of Profit & Loss for the ended
31.3.2015.
3. R had Rs.3,00,000 in bank on 1st January 2014 when he started his business. He
closed his accounts on 31st March, 2015. His single entry books (in which he did not
maintain any account for the bank) showed his position as follows:
31.3.2014 31.3.2015
Cash in hand 2,000 3,000
Stock in trade 19,000 29,000
Debtors 1,000 2,000
Creditors 5,000 3,000

On 1st February, 2014, he began drawing Rs. 700 per month for his personal
expenses from the Cash Box of the business.
His account in the bank had the following entries.
Deposits Withdrawals
1.1.2014 3,00,000 -
1.1.2014 to 31.3.2014 - 2,23,000

1.4.2014 to 31.3.2015 2,30,000 2,70,000

The above withdrawals included payments by cheques of Rs. 2,00,000 and Rs.
60,000 respectively during the period from 1st January, 2014 to 31st March, 2014
and from 1st April, 2014 to 31st March, 2015 for the purchase of machinery for the
business. The deposits after 1st January, 2014 consisted wholly of sale price received
from customers by cheques. Draw up R’s Statement of Affairs as at 31st March, 2014

CA – Intermediate 2
 KS Academy Accounting

and 31st March, 2015 respectively and work out his profit or loss for the year ended
31st March, 2015.

4. Akash and Bikash are partners in a firm sharing profits and losses in the proportion
of 3 and 2. They keep their books on the Single Entry System. On 31 st December,
2013, the following Statement of Affairs was extracted from their books.

Liabilities Rs. Assets Rs.

Capital Accounts Plant & Machinery 30,000
Akash 25,000 Stock 20,000
Bikash 20,000 Sundry Debtors 35,000
Loan – Bikash 25,000 Cash at bank 15,000
Sundry Creditors 30,000
1,00,000 1,00,000
On 31st December, 2014 their assets and liabilities were: Sundry Debtors
Rs. 40,000; Sundry Creditors Rs. 25,000; Plant and Machinery Rs. 50,000; Stock
Rs.30,000; Bills Receivable Rs. 5,000; Cash at Bank Rs. 25,000; Loan – Bikash Rs.
25,000.
You are required to prepare a Profit and Loss Statement for the year ended 31st
December, 2014 and a Statement of Affairs as at that date after taking onto
consideration the following:
a) Plant and Machinery is to be depreciated by 10% p.a.
b) Stock is to be reduced to Rs. 25,000
c) A provision for bad debts to be raised at 5% on Sundry Debtors.
d) Interest on loan is to be allowed at 6% p.a.
e) During the period Akash and Bikash draw Rs. 5,000 and Rs. 3,000
respectively.
5. The following are the Balance sheet of M/s P, Q and R as on March 31, 2014

Liabilities Rs. Assets Rs.

Sundry Creditors 14,200 Cash in Hand 400

Bills Payable 12,800 Cash at Bank 3,800

P's Fixed Capital 15,000 Sundry Debtors 8,400

Q's Fixed Capital 10,000 Stock 16,700

R's Fixed Capital 5,000 Furniture and Fittings 12,000

P's Current Account 480 Machinery and Plant 16,000

CA – Intermediate 3
KS Academy Accounting

Q's Current Account 340 R's Current Account 520

57,820 57,820

P,Q and R share profits in the ratio of 3:2:1 respectively after charging 12% interest
on capitals. During 2014-2015. The drawings were: P at Rs.800 per month; and Q
at Rs.600 per month and R at Rs.500 per month.

On 31st March 2015, the various Assets were: Cash in Hand, Rs.300; Sundry
Debtors, Rs.8,600; Stock, Rs.22,750 at selling price which was fixed at cost plus
25%. Furniture and Fittings, Rs.10,800; Machinery and Plant, Rs.28,000.

Liabilities were: Sundry Creditors, Rs. 13,400; Bills payable, Rs.12,400 and Bank
Overdraft, Rs.6,000 as per Pass book which showed that a Cheque of Rs.1,000
deposited had been returned dishonored. Ascertain the Profit or Loss made by the
firm in 2014-2015 and show the Balance sheet as on 31st March, 2015.
6. The books of L.M Prasad, a shopkeeper, are kept by single entry. He has submitted
accounts for the purpose of income tax showing the profits:

Year ended, 31st December Rs.

2009 73,500
2010 74,000
2011 78,700
2012 1,37,500
2013 1,21,400
2014 92,600
Total 5,77,700
The Assessing officer (A.O.) is not satisfied as to the accuracy of the accounts
submitted by Mr. Prasad. You are instructed to assist in establishing their
correctness, and for that purpose you are supplied with the following information:
a) Assets and Liabilities of the business as at 31st December, 2008 were: Cash at
Bank and in Hand Rs.94,700; Debtors Rs.14,500; Stock Rs.54,200; Creditors
Rs.73,200.
b) Prasad owed his brother-in-law, Nitish Rs.40,000 on 31st December, 2008. On
15th February, 2011 he repaid this amount; and on 1st January, 2014, he lent
Nitish Rs.30,000
c) Prasad owns a house which he purchased in 2007 for Rs.2,00,000 and a car
which he purchased in 2010 for Rs.75,000. In 2013 he bought 1,000 shares of
Reliance Infocom Ltd. for Rs.75,000

CA – Intermediate 4
 KS Academy Accounting

d) In 2014 Rs.30,000 was stolen from his private house (he was not insured against
theft)
e) Prasad estimates that his household expenses have been: 2009- Rs.30,000;
2010-Rs.40,000; 2011-Rs.60,000; 2012,2013 and 2014- Rs.70,000 every year
(exclusive of money stolen).
f) On 31st December, 2014 the Assets and Liabilities of the Business were: Cash at
Bank and hand Rs.1,94,500; Debtors Rs.59,200; Stock Rs.67,400; Creditors
Rs.84,000.
From the above information, prepare a Statement showing the increase of capital
over the period as a whole and its relation to the total of the profits stated
7. Mr. X could not keep complete records. He furnishes you the following information
for the year 2014-15:
Particulars of Assets and Liabilities:

01.04.2014 01.04.2015
Rs. Rs.
Stock-in-trade 37,400 46,800
Sundry Debtors 24,000 28,000
Sundry Creditors 18,000 3,000
Bills Receivable 8,000 10,000
Bills Payable 2,000 400
Fixed Assets 25,200 25,200
Bank Balance 8,700 1,690(Cr.)
Information:
On 01.10.2014 he sold his private investments of Rs.4,000 at 25% premium andn
brought this money into his business. His drawings were Rs.1,000 per month; Goods
costing Rs.3000 were taken away by Mr. X for his personal use. A provision @ 10% is
required for doubtful debts and depreciation @5% p.a. is to be written-off on Fixed
assets, Rs.6,000 is outstanding for wages and Rs.3,800 for salaries, prepaid
insurance amounted to Rs.400. Provide interest on capital @ 5% p.a. and for group
incentives to Staff @ 5% on Net profit after charging such incentive and interest on
capital.
Required:
From the above particulars,
i) Find out profit or loss by statement of affairs method
ii) Prepare the balance sheet as at 31.03.2015.

CA – Intermediate 5
 KS Academy Accounting

8. A,B and C run a business sharing profits and losses in proportion of 2:2:1. On 1 st
January, 2015 their respective capitals were Rs.96,000, Rs. 90,000 and Rs.84,000.
On 30th June, 2015 the following was the position:

Rs.
Creditors 30,000
Furniture 9,000

Book Debts 1,80,000

Stock 90,000

Cash in Hand and at bank 36,000

The drawings of the partners respectively were Rs.12,000, Rs.9,000 and Rs.6,000
during the half-year. Each partner is entitled to an interest at the rate of 5% p.a. on
capital. Interest on drawings was calculated as Rs.600 for A, Rs.450 in case of B and
in Rs.300 in case of C.
You are required to prepare:
i) A statement of affairs as on 30th June 2015
ii) Calculate the Profits for the Half-Year ending on 30th June 2015 and allocate the
same amongst the partners. Also calculate Capital of each partner as on 30 th
June 2015.
9. The Income tax officer, assessing the income of Shri Moti for the financial years
2013-14 and 2014-15 feels that Shri Moti has not disclosed the full income. He gives
you the following particulars of Assets and Liabilities of Shri Moti on 1 st April, 2013
and 1st April, 2015.

01.04.2013 Assets: Cash in Hand 25,500

Stock 56,000
Sundry Debtors 41,500
Land and Building 1,90,000
Wife's Jewellery 75,000
Liabilities: Owing to Moti's Brother 40,000
Sundry Creditors 35,000
01.04.2015 Assets: Cash in Hand 16,000
Stock 91,500
Sundry Debtors 52,500
Land and Building 1,90,000
Motor Car 1,25,000
Wife's Jewellery 1,25,000
Loan to Moti's Brother 20,000
Liabilities: Sundry Creditors 55,000

CA – Intermediate 6
 KS Academy Accounting

During the two years the domestic expenditure was Rs.4,000 per month. The
declared income of the financial years were Rs.1,05,000 for 2013-14 and
Rs.1,23,000 for 2014-15 respectively.
State whether the Income tax officer’s contention is correct. Explain by giving your
workings.

10. Suresh does not maintain his books of Accounts under the Double entry System but,
keeps slips of papers from which he makes up his annual accounts. He has borrowed
moneys from a Bank to whom he has to render figures of profits every year. He has
given the Bank the following profit figures:
Year ending Profits
31st December Rs.
2010 20,000
2011 32,000
2012 35,000
2013 48,000
2014 55,000
The Bank appoints you to audit the statements and verify whether the figures of
profits report is corrected or not; for this purpose, the following figures are made
available to you:
a) Position as on 31.12.2009: Sundry Debtors Rs.20,000; Stock in Trade(at 95% of
the cost) Rs.47,500; Cash in Hand and at Bank Rs.12,600; Trade Creditors
Rs.6,000; Expenses Due Rs.1,600.
b) He had borrowed Rs.5,000 from his wife on 30th September 2009 of which he had
agreed to pay simple interest @ 12% p.a. The loan was repaid along with interest
on 31st December 2011.
c) In December 2010 he had advanced Rs.8,000 to A for Purchase of a vacant land.
The property was registered in March 2012 after payment of balance
consideration of Rs.32,000. Cost of Registration incurred for this were Rs.7,500.
d) Suresh purchased jewellery for Rs.15,000 for his daughter in October 2012.
Marriage expenses incurred in January were Rs.24,000.

e) A new VCR was purchased by him in March 2014 for Rs.18,000 and presented by
him to his friend in November 2014.
f) His annual household expenses amounted to a minimum of Rs.24,000
g) The position of Assets and Liabilities as on 31 December 2014 was found to be
Overdraft with Bank (Secured against property) Rs.12,000; Trade Creditors
Rs.10,000. Expenses payable Rs.600; Sundry Debtors (including Rs.600 due from

CA – Intermediate 7
 KS Academy Accounting

a peon declared insolvent by court) Rs.28,800; Stock in Trade (at 125% of cost to
reflect market value) Rs.60,000 and Cash in Hand Rs.250.

It is Found that the Rate of Profit has been uniformed throughout the period and the
proportion of sales during the years to total sales for the period was in the ratio of
3:4:4:6:8.
Ascertain the annual profits and indicate differences if any, with those reported by
Suresh to the Bank earlier.
All workings are to form part of your answer.

11. A and B are in Partnership having Profit sharing ratio 2:1 the following information is
available about their assets and liabilities:
31.03.2014 31.03.2015
Rs. Rs.
Furniture 1,20,000
Advances 70,000 50,000
Creditors 32,000 30,000
Debtors 40,000 45,000
Stock 60,000 74,750
Loan 80,000 -
Cash at Bank 50,000 1,40,000

The partners are entitled to salary @ Rs.2,000 p.m. They contributed proportionate
capital. Interest is paid @ 6% on capital and charged @10% on drawings.
Drawings of A and B
A B
Date Rs. Rs.
30-Apr 2,000 -
31-May - 2,000
30-Jun 4,000 -
30-Sep - 6,000
31-Dec 2,000 -
28-Feb - 8,000
On 30 June, they took C as 1/3 partner who contributed Rs.75,000. C is entitled
th rd

to share of 9 months’ profit. The new profit ratio becomes 1:1:1. A withdrew his
proportionate share. Depreciate furniture @ 10% p.a. new purchases Rs.10,000 may
be deprecated for 1/4th of a Year.
Current account as on 31.03.2014: A Rs.5,000(Cr.), B Rs.2,000(Dr.)
Prepare Statement of Profit, Current Accounts of Partners and Statement of Affairs as
on 31.03.2015.

CA – Intermediate 8