Single entry Question with answers

Radheshyam a retail trader had no proper methods accounting but the following but the following information is made available to you, you are required to prepare opening and closing statement of Affairs and Statement showing Profit or Loss for the year ended 31^st March, 2007 after taking into consideration the adjustments.

Particulars	Amount (`.) 01.04.2006	Amount (`.) 31.03.2007
Sundry Debtors	22,500	25,000
Sundry Creditors	30,000	35,000
Bank overdraft	40,000	20,000
Stock	32,500	40,000
Cash in Hand	1,000	4,000
Bill Receivable	30,000	40,000
Furniture	5,000	5,000
Motor Van	40,000	40,000
Computer	30,000	60,000

                   Adjustments:-

(1)      On 1^st October, 2006 Mr. Radheshyam had withdrawn `.25,000 for personal use out of which he invested `. 5,000 at par on the same day in 10% Municipal Bonds which is treated as business assets.

(2)      He had also withdrawn `. 15,000 for his daughter’s marriage.

(3)      Depreciate Furniture by 10% p.a. and write off `.1,000 from motor van.

(4)      As regards debtors `.1,000 is irrecoverable and further reserve of 5% is to be made on debtors.

(5)      Allow interest on Capital at 10% p.a.

(6)      Charge interest on Drawing `. 1,000.                                               (10)

In the books of Radheshyam

Opening Statement of Affairs as on 1.4.2006

Liabilities	Rs.	Assets	Rs.
Capital Sundry Creditors Bank Overdraft	91,000 30,000 40,000	Sundry Debtors Stock Cash in hand Bills Receivable Furniture Motor Van Computers	22,500 32,500 1,000 30,000 5,000 40,000 30,000
	1,61,000		1,61,000

Closing Statement of Affairs as on 31.3.2007

Liabilities	Rs.	Rs.	Assets	Rs.	Rs.
Capital Sundry Creditors Bank Overdrafts		1,60,550 35,000 20,000	Sundry Debtors Less: New Bad debts Less: New R.D.D. Stock Cash in hand Bills Receivable Furniture Less: Depreciation Motor Van Less: Written off Computers 10% Municipal Bonds Add: Interest	25,000   1,000 24,000   1,200 5,000   500 40,000  1,000 5,000    250	22,800 40,000 4,000 40,000 4,500 39,000 60,000 5,250
		2,15,550			2,15,550

Statement of profit or loss as on 31.3.2007

Particulars	Rs.	Rs.
Capital at the end of the year Add: (1) Drawings (20,000 + 15,000)         (2) Interest on Drawings	35,000 1,000	160550 36,000
Less: (1) Further capital introduced          (2) Interest on capital	- 9,100	1,96,550 9,100
Less: Capital at the beginning of the year		1,87,450 91,000
Net Profit		96,450

Working Note: Interest on Drawings is directly given in the problem, so there is no need to consider average interest.