Under this topic, we should find out opening capital, closing capital and profit or loss for the period.
Step 1: Find out opening capital or prepares opening statement of affairs (never adjust here, additional information),
Step 2: Prepare closing statement of affairs to find out closing capital (adjustments can be adjusted here),
Step 3: Prepare statement of P&L to find out profit or loss for the year (adjustment can be adjusted here).
Note: In this eBook, entire related additional information are adjusted with closing statement of affairs.
The opening statement of affairs is prepared to find-out opening capital.
Statement of affairs is similar to balance sheet.
All the assets are recorded on right hand side.
All the liabilities are recorded on left hand side.
The difference between assets and liabilities is opening capital.
The closing statement of affairs is prepared to find-out closing capital.
Statement of affairs is similar to balance sheet.
All the assets are recorded on right hand side.
All the liabilities are recorded on left hand side.
If there is any adjustment, it should be adjusted with closing statement of affairs.
The difference between assets and liabilities is closing capital.
After preparation of opening statement of affairs and closing statement of affairs, statement of profit and loss is prepared.
Before preparing statement of profit and loss, following points should be found-out:
Determination of drawing made by the owner during the year,
Additional or further capital invested by the owner,
Interest on capital (if any)
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 2A
AK Traders keeps its accounts under single entry system. The following summary of assets and liabilities are given on 31st December 2020:
Trade creditors |
$350,000 |
|
Furniture |
$20,000 |
Sundry debtors |
300,000 |
|
Prepaid insurance |
5,000 |
Stock in trade |
250,000 |
|
Cash balance |
50,000 |
Additional information:
(a) The trader started business on 1st January 2020 with capital of $250,000.
(b) Business owner withdrew $3,000 per month.
(c) Write off bad debts of $6,000.
(d) Depreciate furniture by 10%.
Required: (i) Closing statement of affairs to find out closing capital;
(ii) Amount of profit earned by a trader during the year.
[Answer: Closing capital = $267,000; Profit for the year = $53,000]
SOLUTION:
Statement of Affairs
On 31st December 2020
Liabilities |
Amount $ |
Assets |
|
Amount $ |
Trade creditors |
3,50,000 |
Sundry debtors |
3,00,000 |
|
Closing capital (b/f) |
2,67,000 |
Less: Bad debts |
(6,000) |
2,94,000 |
|
|
Stock in trade |
|
2,50,000 |
|
|
Furniture |
20,000 |
|
|
|
Less: Depn 10% |
(2,000) |
18,000 |
|
|
Prepaid insurance |
|
5,000 |
|
|
Cash balance |
|
50,000 |
|
6,17,000 |
|
|
6,17,000 |
Statement of Profit and Loss
Particulars |
|
Amount $ |
Closing capital |
|
2,67,000 |
Add: Drawings ($3,000 x 12) |
|
36,000 |
Less: Additional capital |
|
Nil |
Less: Opening capital |
|
(250,000) |
Profit for the year |
|
53,000 |
###########
Click on link for YouTube videos: |
|
Accounting Equation |
|
Basic Journal Entries in Nepali |
|
Basic Journal Entries |
|
Journal Entry and Ledger |
|
Ledger |
|
Subsidiary Book |
|
Cash Book |
|
Trial Balance & Adjusted Trial Balance |
|
Bank Reconciliation Statement (BRS) |
|
Depreciation |
|
Final Accounts: Class 11 |
|
Adjustment in Final Accounts |
|
Capital and Revenue |
|
Single Entry System |
|
Non-Trading Concern |
|
Government Accounting |
|
Goswara Voucher (Journal Voucher) |
###########
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 2B
Manju started a business with cash $200,000 and stock in trade of $50,000. Her position on 31st December 2020 was:
Transactions |
Amount $ |
|
|
|
Stock at the end |
2,00,000 |
|
Machinery (1 April) |
30,000 |
Sundry debtors |
1,50,000 |
|
Cash at bank |
80,000 |
Sundry creditors |
2,00,000 |
|
|
|
Additional information:
(a) She withdrew $4,000 per month for domestic purpose.
(b) Provide depreciation on machinery 10% p.a.
(c) Interest on capital is provided $25,000.
Required: (i) Closing statement of affairs to find out closing capital.
(ii) Amount of profit or loss during the year.
[Answer: Closing capital = $1,10,000; Profit for the year = $30,000;
*Opening capital (2,00,000 + 50,000) = $2,50,000]
SOLUTION:
Statement of Affairs
On 31st December 2020
Liabilities |
Amount $ |
Assets |
|
Amount $ |
Sundry creditors |
2,00,000 |
Stock at the end |
|
2,00,000 |
Closing capital (b/f) |
2,57,750 |
Sundry debtors |
|
1,50,000 |
|
|
Machinery |
30,000 |
|
|
|
Less: Depn (10%, 9m) |
(2,250) |
27,750 |
|
|
Cash at bank |
|
80,000 |
|
4,57,750 |
|
|
4,57,750 |
Statement of Profit and Loss
Particulars |
|
Amount $ |
Closing capital |
|
2,57,750 |
Add: Drawings ($4,000 x 12) |
|
48,000 |
Less: Additional or further capital |
|
Nil |
Less: Interest on capital |
|
(25,000) |
Less: Opening capital |
|
(200,000) |
Profit for the year |
|
80,750 |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 2C
A trader who keeps his books of accounts under single entry system has following information:
Extracted Balance of Ledgers on 31st December 2020
Account receivable |
$1,50,000 |
|
Cash and bank |
$1,40,000 |
Stock in trade |
1,30,000 |
|
Furniture |
30,000 |
Accounts payable |
90,000 |
|
Loan from friends |
1,00,000 |
Equipment |
60,000 |
|
Prepaid rent |
25,000 |
Motorbike |
1,80,000 |
|
|
|
Additional information:
(a) Business started with cash of $50,000, bank balance of $1,50,000 and trading goods $50,000.
(b) Monthly drawing was $5,000 per month for twelve month.
(c) Further capital invested $50,000.
(d) Depreciate fixed assets by 15%.
Required: (i) Closing statement of affairs to find out closing capital; (ii) Profit and loss statement
[Answer: Closing capital = $4,84,500; Profit for the year = $269,500;
*Opening capital (50,000 + 150,000 + 50,000) = $250,000]
SOLUTION:
Statement of Affairs
On 31st December 2020
Liabilities |
Amount $ |
Assets |
|
Amount $ |
Accounts payable |
90,000 |
Account receivable |
|
1,50,000 |
Loan from friend |
1,00,000 |
Stock in trade |
|
1,30,000 |
Closing capital (b/f) |
4,84,500 |
Equipment |
60,000 |
|
|
|
Less: Depn 15% |
(9,000) |
51,000 |
|
|
Motorbike |
1,80,000 |
|
|
|
Less: Depn 15% |
(27,500) |
1,53,000 |
|
|
Cash and bank |
|
1,40,000 |
|
|
Furniture |
30,000 |
|
|
|
Less: Depn 15% |
(4,500) |
25,500 |
|
|
Prepaid rent |
|
25,000 |
|
6,74,500 |
|
|
6,74,500 |
Statement of Profit and Loss
Particulars |
|
Amount $ |
Closing capital |
|
4,84,500 |
Add: Drawings ($5,000 x 12) |
|
60,000 |
Less: Additional or further capital |
|
(50,000) |
Less: Interest on capital |
|
Nil |
Less: Opening capital |
|
(225,000) |
Profit for the year |
|
2,69,500 |
Opening capital = cash $50,000 + bank $1,50,000 + stock $50,000 = $2,50,000
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 2D
A trader, who keeps his books of account on single entry system, provided you following assets and liabilities on 31st March 2020:
Cash and bank |
$50,000 |
|
Machinery |
$2,00,000 |
Sundry creditors |
80,000 |
|
Closing stock |
3,00,000 |
Sundry debtors |
1,20,000 |
|
Bills payable |
2,00,000 |
Prepaid rent |
25,000 |
|
10% Investment (1 July) |
1,50,000 |
Additional information:
The trader started business on 1st April 2019 with capital of $2,50,000.
His quarterly drawings were $18,250 but additional capital was $1,50,000.
Depreciation is charged 10% p.a. on machinery.
Bad debts written off $10,000 and 5% for doubtful debts on sundry debtors.
Required: (a) Closing statement of affairs to determine closing capital; (b) Statement of profit and loss
[Answer: Closing capital = $5,47,000; Profit for the year = $2,20,000;
*Accrued interest (1,50,000 x 10% x 6/12) = $7,500]
SOLUTION:
Statement of Affairs
On 31st March 2021
Liabilities |
Amount $ |
Assets |
|
Amount $ |
Sundry creditors |
80,000 |
Cash and bank |
|
50,000 |
Bills payable |
2,00,000 |
Debtors |
1,20,000 |
|
Closing capital (b/f) |
5,47,000 |
Less: Bad debts |
(10,000) |
|
|
|
|
1,10,000 |
|
|
|
Less: PBD 5% |
(5,500) |
1,04,500 |
|
|
Prepaid rent |
|
25,000 |
|
|
Machinery |
2,00,000 |
|
|
|
Less: Depn 10% |
(20,000) |
1,90,000 |
|
|
Closing stock |
|
3,00,000 |
|
|
10% Investment |
1,50,000 |
|
|
|
Add: Accrued interest |
+ 7,500 |
1,57,500 |
|
8,27,000 |
|
|
8,27,000 |
Statement of Profit and Loss
Particulars |
|
Amount |
Closing capital |
|
5,47,000 |
Add: Drawings ($18,250 x 4) |
|
73,000 |
Less: Additional or further capital |
|
(150,000) |
Less: Interest on capital |
|
Nil |
Less: Opening capital |
|
(250,000) |
Profit for the year |
|
2,20,000 |
Click on book cover photo for FREE eBooks
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 2E
Mr Kamal maintains his books under single entry system. He has following information:
Particulars |
1st Jan 2020 |
31st Dec 2020 |
Furniture |
$20,000 |
$20,000 |
Stock |
2,80,000 |
3,50,000 |
Sundry debtors |
1,50,000 |
2,40,000 |
Cash |
15,000 |
50,000 |
Sundry creditors |
1,75,000 |
1,50,000 |
15% Loan (1 May) |
– |
1,00,000 |
Investment |
– |
40,000 |
Additional information:
(i) He introduced further capital of $50,000 and his drawings during the year were $90,000.
(ii) Provide a reserve for bad and doubtful debt at 5%.
(iii) Depreciate furniture by 10%.
Required: (a) Statement of affairs to find out opening and closing capital; (b) Statement of profit and loss
[Answer: Opening capital = $290,000;
Closing capital = $401,000; Profit for the year = $151,000]
SOLUTION:
Statement of Affairs
On 1st January 2020
Liabilities |
Amount $ |
Assets |
Amount $ |
Sundry creditors |
1,75,000 |
Furniture |
20,000 |
Opening capital (b/f) |
2,90,000 |
Stock |
2,80,000 |
|
|
Sundry debtors |
1,50,000 |
|
|
Cash |
15,000 |
|
4,65,000 |
|
4,65,000 |
Statement of Affairs
On 31st December 2020
Liabilities |
|
Amount $ |
Assets |
|
Amount $ |
Sundry creditors |
|
1,75,000 |
Furniture |
20,000 |
|
15% Loan |
100,000 |
|
Less: Depn 10% |
(2,000) |
18,000 |
Add: O/s interest (10m) |
+ 10,000 |
1,10,000 |
Stock |
|
3,50,000 |
Closing capital (b/f) |
|
4,01,000 |
Sundry debtors |
240,000 |
|
|
|
|
Less: PBD 5% |
(12,000) |
2,28,000 |
|
|
|
Cash |
|
50,000 |
|
|
|
Investment |
|
40,000 |
|
|
6,86,000 |
|
|
6,86,000 |
Statement of Profit and Loss
Particulars |
|
Amount $ |
Closing capital |
|
4,01,000 |
Add: Drawings |
|
90,000 |
Less: Additional or further capital |
|
(50,000) |
Less: Interest on capital |
|
Nil |
Less: Opening capital |
|
(290,000) |
Profit for the year |
|
1,51,000 |
Interest on loan = 100,000 @ 15% x 8/12 = $10,000
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 2F
Ms Eliza maintains her books of account on single entry system. She submitted the following details:
Particulars |
1st Jan 2020 |
31st Dec 2020 |
Cash |
$50,000 |
$70,000 |
Furniture |
30,000 |
30,000 |
Stock |
3,60,000 |
4,50,000 |
Debtors |
60,000 |
1,20,000 |
Creditors |
80,000 |
75,000 |
Bank (overdraft) |
10,000 |
(50,000) |
Additional information:
(i) She introduced further capital of $120,000
(ii) Her drawings half yearly was $50,000.
(iii) Depreciate furniture by 20% p.a.
(iii) Reserve for bad and doubtful debts at 5% on debtors.
Required: (a) statement of affairs to determine opening and closing capital; (b) Statement of profit and loss
[Answer: Opening capital = $430,000]
Closing capital = $533,000; Profit for the year = $83,000]
SOLUTION:
Statement of Affairs
On 1st January 2020
Liabilities |
Amount $ |
Assets |
Amount $ |
Creditors |
80,000 |
Cash |
50,000 |
Opening capital (b/f) |
4,30,000 |
Furniture |
30,000 |
|
|
Stock |
3,60,000 |
|
|
Debtors |
60,000 |
|
|
Bank balance |
10,000 |
|
5,10,000 |
|
5,10,000 |
Statement of Affairs
On 31st December 2020
Liabilities |
Amount $ |
Assets |
|
Amount $ |
Creditors |
75,000 |
Cash |
|
70,000 |
Bank overdraft |
50,000 |
Furniture |
30,000 |
|
Closing capital (b/f) |
5,33,000 |
Less: Depn 20% |
(6,000) |
24,000 |
|
|
Stock |
|
4,50,000 |
|
|
Debtors |
120,000 |
|
|
|
Less: PBD 5% |
(6,000) |
1,14,000 |
|
6,58,000 |
|
|
6,58,000 |
Statement of Profit and Loss
Particulars |
|
Amount $ |
Closing capital |
|
5,33,000 |
Add: Drawings ($50,000 x 2) |
|
1,00,000 |
Less: Additional or further capital |
|
(1,20,000) |
Less: Interest on capital |
|
NIL |
Less: Opening capital |
|
(4,30,000) |
Profit for the year |
|
83,000 |
#####
PROBLEMS AND ANSWERS OF SINGLE ENTRY SYSTEM |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 2A
AR Traders who keeps his books of accounts under single entry system provided you the following summary of assets and liabilities of its business on 31st December 2020:
Trade creditors |
$35,000 |
|
Furniture |
$20,000 |
Sundry debtors |
30,000 |
|
Prepaid insurance |
5,000 |
Stock in trade |
30,000 |
|
Cash balance |
20,000 |
Additional information:
The trader started business on 1st January 2020 with capital of $50,000.
His estimated drawing during the year amounted to $6,800.
Write off bad debts of $600. Depreciate furniture by 10%.
Required: (a) Closing statement of affairs to find out closing capital;
(b) Amount of profit earned by a trader during the year.
[Answer: Closing capital = $67,400 or $70,000;
Profit for the year = $24,200]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 2B
Mariam keeps her books of accounts under single entry system supplied to you the following summary of assets and liabilities of his business for 31st December 2020:
|
Amount $ |
|
|
Amount $ |
Account receivable |
55,000 |
|
Cash at bank |
40,000 |
Stock trade |
30,000 |
|
Furniture |
20,000 |
Account payable |
60,000 |
|
Loan from friends |
10,000 |
Equipment |
80,000 |
|
Advance rent |
5,000 |
Other information:
The capital at the start of the business consisted cash of $10,000, bank balance of $50,000 and trading goods $20,000.
Her monthly drawing was $600.
Depreciate equipment by $6,000
Advance rent expired to the extent of $2,000.
Required: (a) Closing statement of affairs to find out closing capital; (b) Profit and loss statement
[Answer: Closing capital = $152,000 or $1,60,000;
Profit for the year = $79,200;
*Opening capital (10,000 + 50,000 + 20,000) = $80,000]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 2C
Munabbar started a business with cash $40,400 and building $50,000 on 1st January 2020. His position on 31st December 2020 is as follows:
Bills payable |
30,000 |
|
Debtors |
25,000 |
Plant |
40,000 |
|
Bank loan |
12,000 |
Creditors |
10,000 |
|
Furniture |
25,000 |
Bank balance |
22,500 |
|
Investment |
32,500 |
Additional information:
He drew $49,200 during the year.
He introduced further capital $28,800 in the middle of the year.
Depreciate furniture by 5% and building 10%.
Required: (a) Closing statement of affairs to find out closing capital; (b) Statement of profit and loss
[Answer: Closing capital = $136,750 or $1,43,000;
Profit for the year = $66,750;
*Opening capital (40,400 + 50,000) = $90,400
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 2D
Rajan keeps his books of account on single entry system provided you the following summary of assets and liabilities of his business for the year ended 31st December 2020:
Sundry creditors |
$50,000 |
|
Plant |
$50,000 |
Sundry debtors |
90,000 |
|
Cash balance |
20,000 |
Stock |
30,000 |
|
|
|
Other information:
The trader started business on 1st January 2020 with capital of $70,000.
Drawings were $6,000 for every six months.
Write off bad debts $1,000.
Depreciate plant by 10%.
Required: (a) Closing statement of affairs to find out closing capital; (b) Statement of profit and loss
[Answer: Closing capital = $1,34,000 or $1,40,000
Profit for the year = $76,000;
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 2E
Khan Meat Shop started business with equipment of $200,000 and bank balance $20,000 on 1st January 2020. His financial position at the end of the year shows as:
Sundry debtors |
$20,000 |
|
Stock |
$80,000 |
Cash at bank |
$10,000 |
|
Bank overdraft |
$60,000 |
Additional information:
(i) His drawing per month was $3,000.
(ii) Depreciate equipment by 10% p.a.
(iii) Capital introduced on July $50,000.
Required: (a) Statement of affairs showing closing capital; (b) Statement of profit and loss
[Answer: Closing capital = $2,30,000 or $2,50,000
Loss for the year = $4,000;
*Opening capital (2,00,000 + 20,000) = $2,20,000]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 2F
Jessika Beauty Parlour keeps books of accounts on single entry system provided you the following assets and liabilities at the end of December, 2020:
Equipment |
$50,000 |
|
Investment |
$10,000 |
Land |
1,20,000 |
|
Debtors |
30,000 |
Furniture |
40,000 |
|
Borrow from friend |
25,000 |
Creditors |
20,000 |
|
Cash and bank |
50,000 |
Additional information:
Opening capital was $200,000.
Drawing during the year was $15,000.
Depreciate equipment and furniture by 10%.
Write off bad debts of $2,000.
Further capital introduced $50,000.
Required: (a) Statement of affairs to find out closing capital; (b) Statement of profit and loss
[Answer: Closing capital = $244,000 or $255,000;
Profit for the year = $9,000]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 2G
KC Traders started business with a capital of $100,000 on 1st January 2020. Withdraw $1,000 per month for private expenses. At the end of the year his position was as under:
Stock |
$60,000 |
|
Bills receivable |
$10,000 |
Fixed assets |
60,000 |
|
Cash |
19,000 |
Bills payable |
15,000 |
|
Bank loan |
18,000 |
Investment |
20,000 |
|
|
|
Additional information:
(i) Fixed assets revalued $54,000.
(ii) 10% interest on bank loan for one year is to be paid.
(iii) Provide interest on capital @ 10% p.a.
(iv) Life insurance premium paid $8,000.
Required: (a) Closing Statement of affairs; (b) Statement of profit and loss
[Answer: Closing capital = $1,34,200 or $1,36,000;
Profit for the year = $32,200]
***** #EPOnlineStudy *****
Thank you for investing your time.
Please comment on the article.
You can help us by sharing this post on your social media platform.
Jay Google, Jay YouTube, Jay Social Media
जय गूगल. जय युट्युब, जय सोशल मीडिया
Comment box closed