SECOND METHOD CONVERSION OF SINGLE ENTRY INTO DOUBLE ENTRY Example No 3

Solution:         Working Notes:

Calculation of Credit Sales

Total Debtors Account

Particulars

Amount

Particulars

Amount

To Opening balance To Credit sales (Balancing Figure)

Total:

Rs.

500

2,540

By Cash Received By Closing balance

Total:

Rs.

2,500

540

3,040

3,040

Calculation of Credit Purchases
  Total Creditors Account

Particulars

Amount

Particulars

Amount

,

To Cash paid to the creditors To Closing balance

Total:

Rs.

1,900

500

By Opening balanceBy Credit purchase                                                                        .
(Balancing Figure)

Total:

Rs.

800

1,600

2,400

2,400

Calculation of opening capital
                                           Statement of Affairs

As on Jan. 2006

Assets

Amount

Liabilities

Amount

Rs.

Rs.

Cash at Bank

300

Creditors

800

Sundry Debtors

500

Loan

400

Stock

2,000

Capital
Furniture

400

(Balancing Figure)

2,000

Total:

3,200

Total:

3,200

Irshad Sheikh
Trading and profit and loss Account For the year ended 31st Dec. 2006

Particulars

Amount

Particulars

Amount

Rs.

Rs.
To Opening Stock

2,000

By sales 2,540
To Purchases

1,600

By Closing Stock 2,500
To Wages 800-(52X8)

384

To Gross Profit

1,056

5,040

5,040
To Sundry Expenses

700

By Gross profit b/d 1,056
To Net Profit

356

Total:

1,056

Total: 1,056

Irshad Sheikh

Balance Sheet on

Dec. 31st 2006

Assets

Amount

Liabilities

Amount

Cash at Bank Sundry Debtors StockFurniture

Total:

Rs.

400 540 2,500 400

3,840

Sundry Creditors Loan

Capital                       2,000

Add: Net Profit            356

Total:

Rs.

500

1,500

1,840

2,356

Less: Drawing             516

3,840

Working Notes

Total wages paid

Included personal wages Rs. 8 per week (52 X 8)

Wages incurred for business use (800 — 416)

Total Drawings

Drawing included in wages

Add: Goods taken by owner

Rs. 800

Rs. 416

Rs. 384

 

Rs. 416

Rs. 100

Rs. 516

kllustration: 15i

Naseem started business on 1st January, 2005 with a Capital of Rs. 90,000. He kept cash book and a record of his Accounts Receivable and Accounts Payable in a diary. His cash book showed following transactions for the year:

Expenses

22,000

Cash Purchases

56,000

Cash Sales

42,000

Payment to creditors

100,000

Receipt from debtors

140,000

Personal drawing

10,000

Purchases of a truck

60,000

On 31st December, 2005 the stock was valued at Rs. 20,000. The Accounts Payable and Receivable were Rs. 110,000 and Rs. 120,000 respectively. Provide
depreciation on truck at the rate of 20%.
Required: You are required to prepare Trading Profit and Loss Account for the year
ended 31S` December 2005 and Balance Sheet as on date.
(Institute of Bankers)

Working Notes:

Calculation of Credit
Purchases:

Calculation of Credit
Sales

Cash Paid to creditors

1,00,000

Cash received from debtors

1,40,000

Add creditors on 31,12,05

1,10,000

Add Debtors on 31-12-05

1,20,000

Credit Purchases

2,10,000

Credit Sales

2,60,000

Add Cash Purchases

56,000

Add Cash Sales

41,000

Total: Purchases

2,66,000

Total: Sales

3,02,000

Mr. Naseem
Trading Profit and Loss Account
For the year ended 1.12.2005

Particulars

..

Amount

Particulars

Amount

To total purchases

266,000

By total sales

302,000

To Gross profit

56,000

By stock

20,000

Total:

3,22,000

Total:

3,22,000

To Expenses

22,000

By Gross Profit

56,000

To Depreciation Truck

12,000

To Net Profit

22,000

Total:

56,000

Total:

56,000

Mr. Naseem
Balance Sheet
As on 31-12-2005

Assets

Amount

Liabilities

Amount

Cash

24,000

Capital               90,000
Truck                           60,000 Add Net Profit 22,000
Less Depreciation     12,000

48,000

! !7,000

Accounts Receivable

1,20,000

Less Drawing       10,000

1,02,000

Closing Stock

20,000

Accounts Payable

1,10,000

Total:

2,12,000

Total:

2,12,000

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