ACCOUNTS FROM INCOMPLETE RECORDS 14.

39

(vi) Due to lack of information, depreciation has not been provided on fixed
assets.
Illustration 8
Mr. Anup runs a wholesale business where in all purchases and sales are made on
credit. He furnishes the following closing balances:
31st March 31st March
20X1 20X2
Sundry debtors 70,000 92,000
Bills receivable 15,000 6,000
Bills payable 12,000 14,000
Sundry creditors 40,000 56,000
Inventory 1,10,000 1,90,000
Bank 90,000 87,000
Cash 5,200 5,300

Summary of cash transactions during the year 20X1- 20X2:

(i) Deposited to bank after payment of shop expenses @ ` 600 p.m., salary @
` 9,200 p.m. and personal expenses @ ` 1,400 p.m. ` 7,62,750.
(ii) Cash Withdrawn from bank ` 1,21,000.
(iii) Cash payment to suppliers ` 77,200 for supplies and ` 25,000 for furniture.
(iv) Cheques collected from customers but dishonoured ` 5,700.
(v) Bills accepted by customers ` 40,000.
(vi) Bills endorsed ` 10,000.
(vii) Bills discounted ` 20,000, discount ` 750.
(viii) Bills matured and duly collected ` 16,000.
(ix) Bills accepted ` 24,000.
(x) Paid suppliers by cheque ` 3,20,000.
(xi) Received ` 20,000 on maturity of one LIC policy of the proprietor by cheque.
(xii) Rent received ` 14,000 by cheque for the premises owned by proprietor.

© The Institute of Chartered Accountants of India

 14.40 ACCOUNTING

(xiii) A building was purchased on 30-11-20X1 for opening a branch for ` 3,50,000
and some expenses were incurred on this building, details of which are not
maintained.
(xiv) Electricity and telephone bills paid by cash ` 18,700, due ` 2,200.
Other transactions:
(i) Claim against the firm for damage ` 1,55,000 is under legal dispute. Legal
expenses ` 17,000. The firm anticipates defeat in the suit.
(ii) Goods returned to suppliers ` 4,200.
(iii) Goods returned by customers ` 1,200.
(iv) Discount offered by suppliers ` 2,700.
(v) Discount offered to the customers ` 2,400.
(vi) The business is carried on at the rented premises for an annual rent of
` 20,000 which is outstanding at the year end.
Prepare Trading and Profit & Loss Account of Mr. Anup for the year ended 31 st March
20X2 and Balance Sheet as on that date.
Solution
Trading and Profit & Loss Account of Mr. Anup
for the year ended 31 st March 20X2
` ` ` `
To Opening 1,10,000 By Sales 9,59,750
Inventory
To Purchases 4,54,100 Less: Sales
Return (1,200) 9,58,550
Less: Purchases By Closing 1,90,000
Return (4,200) 4,49,900 Inventory
To Gross Profit (b.f.) 5,88,650
11,48,550 11,48,550
To salary (9,200 x 12) 1,10,400 By Gross Profit 5,88,650
To Electricity & Tel. By Discount 2,700
Charges 20,900
(18,700 + 2,200)

© The Institute of Chartered Accountants of India

 ACCOUNTS FROM INCOMPLETE RECORDS 14.41

To Legal expenses 17,000

To Discount (2,400 + 3,150
750)
To Shop exp. 7,200
(600 x 12)
To Provision for 1,55,000
claims for damages
To Shop Rent 20,000
To Net Profit (b.f.) 2,57,700
5,91,350 5,91,350

Balance-Sheet as on 31 st March 20X2

Liabilities ` Assets `
Capital A/c (W.N.vi) 2,38,200 Building (from 3,72,000
summary cash
and bank A/c)
Add : Fresh capital introduced Furniture 25,000
Maturity value from LIC 20,000 Inventory 1,90,000
Rent 14,000 Sundry debtors 92,000
Add : Net Profit 2,57,700 Bills receivable 6,000
5,29,900 Cash at Bank 87,000
Less : Drawing(14,00 x12) (16,800) 5,13,100 Cash in Hand 5,300
Rent outstanding 20,000
Sundry creditors 56,000
Bills Payable 14,000
Outstanding expenses
Legal Exp. 17,000
Electricity &
Telephone charges 2,200 19,200
Provision for claims for
damages 1,55,000
7,77,300 7,77,300

© The Institute of Chartered Accountants of India

 14.42 ACCOUNTING

Working Notes :
(i) Sundry Debtors Account
` `
To Balance b/d 70,000 By Bill Receivable A/c
To Bill receivable A/c-Bills 3,000 Bills accepted by 40,000
dishonoured customers
To Bank A/c-Cheque 5,700 By Bank A/c - 5,700
dishonoured Cheque received
To Credit sales (Balancing 9,59,750 By Cash (from 8,97,150
Figure) summary cash and
bank account)
By Return inward A/c 1,200
By Discount A/c 2,400
By Balance c/d 92,000
10,38,450 10,38,450

(ii) Bills Receivable Account

` `
To Balance b/d 15,000 By Sundry creditors A/c
To Sundry Debtors A/c 40,000 (Bills endorsed) 10,000
(Bills accepted) By Bank A/c (20,000 – 750) 19,250
By Discount A/c 750
(Bills discounted)
By Bank
Bills collected on maturity 16,000
By Sundry debtors
Bills dishonoured (Bal. Fig) 3,000
By Balance c/d 6,000
55,000 55,000

© The Institute of Chartered Accountants of India

 ACCOUNTS FROM INCOMPLETE RECORDS 14.43

(iii) Sundry Creditors Account

` `
To Bank 3,20,000 By Balance c/d 40,000
To Cash 77,200 By Credit purchase
(Balancing figure) 4,54,100
To Bill Payable A/c 24,000
To Bill Receivable A/c 10,000
To Return Outward A/c 4,200
To Discount Received A/c 2,700
To Balance b/d 56,000
4,94,100 4,94,100

(iv) Bills Payable A/c

` `
To Bank A/c (Balance figure) 22,000 By Balance b/d 12,000
To Balance c/d 14,000 By Sundry creditors A/c
Bills accepted 24,000
36,000 36,000

(v) Summary Cash and Bank A/c

Cash Bank Cash Bank
` ` ` `
To Balance b/d 5,200 90,000 By Bank 7,62,750
To Sundry debtors By Cash 1,21,000
(Bal. Fig) 8,97,150 By Shop exp. (600 x 12) 7,200
To Cash 7,62,750 By Salary (9,200 x 12) 1,10,400
To Bank 1,21,000 By Drawing A/c 16,800
(1,400 x 12)
By Bills Payable 22,000
To Sundry Debtors 5,700 By Sundry creditors 77,200 3,20,000
To Bills receivable 19,250 By Furniture 25,000
To Bills receivable 16,000 By Sundry Debtors 5,700

© The Institute of Chartered Accountants of India

 14.44 ACCOUNTING

To Capital (maturity 20,000 By Electricity & Tel. 18,700

value of LIC policy) Charges
To Capital (Rent By Building
received) 14,000 (Bal. fig) 3,72,000
By Balance c/d 5,300 87,000
10,23,350 9,27,700 10,23,350 9,27,700

(vi) Statement of Affairs as on 31 st March 20X1

Liabilities ` Assets `
Sundry Creditors 40,000 Inventory 1,10,000
Bills Payable 12,000 Debtors 70,000
Capital (Balancing figure) 2,38,200 Bills 15,000
receivable
Cash at Bank 90,000
Cash in Hand 5,200
2,90,200 2,90,200
Illustration 9
Ms. Rashmi furnishes you with the following information relating to her business:
(a) Assets and liabilities as on 1.4.20X1 31.03.20X2
` `
Furniture (w.d.v) 12,000 12,700
Inventory at cost 16,000 14,000
Sundry Debtors 32,000 ?
Sundry Creditors 22,000 30,000
Prepaid expenses 1,200 1,400
Unpaid expenses 4,000 3,600
Cash in hand and at bank 2,400 1,250
(b) Receipts and payments during the year:
Collections from debtors, after allowing discount of ` 3,000 amounted to
` 1,17,000.
Collections on discounting of bills of exchange, after deduction of discount of
` 250 by the bank, totaled to ` 12,250.

© The Institute of Chartered Accountants of India