Chapter – 10

Accounting from Incomplete Records

Q.No.1
Assets and Liabilities of Mr. Prakash as on 31-03-2069 and 31-03-2070 are as follows:

31-03-2069 31-03-2070
Assets:
Building 100,000
Furniture 50,000
Stock 1,20,000 2,70,000
Sundry Debtors 40,000 90,000
Cash at Bank 70,000 85,000
Cash in Hand 1,200 3,200
Liabilities:
Loans 1,00,000 80,000
Sundry Creditors 40,000 70,000
Mr. Prakash decided to depreciated building by 2.5% and furniture by 10%. One Life Insurance Policy of
Mr. Prakash was matured during the period and the amount of Rs. 40,000 is retained in the business. Mr.
Prakash drew Rs. 2,000 p.m. meeting family expenses.
Prepare Statement of Affairs & find out profit of Mr. Prakash
Ans: Op. Capital = Rs. 2,41,200 Cl. Capital= Rs 4,40,700 NP= Rs. 1,83,500

Q.No.2
Lucky does not maintain proper books of accounts. However he maintains a record of his bank transactions
and also is liable to give the following information from which you are requested to prepare his final accounts
for the year 2003.

Particulars 1.1.2003 31.12.2003

Debtors 1,02,500 ?
Creditors ? 46,000
Stock 50,000 62,500
Bank Balance ? 50,000
Fixed Assets 7,500 9,000
Details of his Bank transactions were as follows:
Rs.
Received from Debtors 3,40,000
Additional capital brought in 5,000
Sale of Fixed Assets (Books Value Rs.2,500) 1,750
Paid to creditors 2,80,000
Expenses Paid 49,250
Personal Drawings 25,000
Purchase of fixed assets 5,000
No cash transaction took place during the year. Goods are sold at cost plus 25%. Cost of goods sold was
Rs.2,60,000(June 2012)(8 Marks)
Ans: Op. Capital = Rs 1,69,000 B/S= Rs.2,09,000 NP= Rs.14,000
Chapter-10 Accounting from Incomplete Records CA. Rajan Adhikari
Q.No.3
From the following information furnished by Shri Ramji, Prepare Trading and Profit and Loss account for
the year ended 31.3.2005. Also draft his balance Sheet as at 31.3.2005:

1.4.2004 31.3.2005
Creditors 3,15,400 2,48,000
Expenses Outstanding 12,000 6,600
Fixed Assets (Includes Machinery) 2,32,200 2,40,800
Stock in Hand 1,60,800 2,22,400
Cash in Hand 59,200 24,000
Cash at Bank 80,000 1,37,600
Sundry Debtors 3,30,600 ?
Details of the Years transactions are as follows:
Cash and discount credited to debtors 12,80,000
Returns from debtors 29,000
Bad debts 8,400
Sales (Both Cash and Credit) 14,36,200
Discount allowed by creditors 14,000
Returns to Creditors 8,000
Capital Introduced by cheque 1,70,000
Collection from debtors (Deposited into Bank after receiving 12,50,000
cash)
Cash purchases 20,600
Expenses paid by cash 1,91,400
Drawings by cheque 8,600
Machinery acquired by cheque 63,600
Cash Deposited into Bank 1,00,000
Cash withdrawn from Bank 1,84,800
Cash Sales 92,000
Payment to creditors by Cheque 12,05,400
Note:- Ramji has not sold any fixed Asset during the year:
Ans: Op. Capital = Rs 5,35,400 B/S= Rs.9,82,200 NP= Rs. 30,800
Q.No.4
The books of account of Ruk Ruk Maan of Mumbai showed the following figures:

31-3-2008 31-3-2009
Furniture and Fixtures 2,60,000 2,34,000
Stock 2,45,000 3,20,000
Debtors 1,25,000 ?
Cash in hand & Bank 1,10,000 ?
Creditors 1,35,000 1,90,000
Bills Payable 19,000 20,000
An analysis of the cash book revealed the following:
Cash Sales 16,20,000
Collection from debtors 10,58,000
Discount allowed to debtors 20,000
Cash purchases 6,15,000
Payment to creditors 9,73,000
Discount received from creditors 32,000

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Payment for bills payable 4,30,000
Drawings for domestic expenses 1,20,000
Salaries Paid 2,36,000
Rent paid 1,32,000
Sundry trade expenses 81,000
Depreciation is provided on furniture & fixtures @ 10% p.a on diminishing balance method. Ruk Ruk man
maintains a steady gross profit rate of 25% on sales.
You are required to prepare trading and profit and loss account for the year ended 31st march, 2009 and
balance sheet as on that date.
Ans: Op. Capital = Rs 5,86,000 B/S= Rs.8,90,000 NP= Rs.2,14,000
Q.No.5
Mr.A runs a business of readymade garments. He closes the books of accounts on 31st March, 2010. The
Balance Sheet as on 31st March, 2010 was as follows:

Liabilities Rs. Assets Rs.

A’s Capital 4,04,000 Furniture 40,000
Creditors 82,000 Stock 2,80,000
Debtors 1,00,000
Cash in Hand 28,000
Cash at Bank 38,000
You are furnished with the following information:
(1) His sales for the year ended 31st March, 2011 were 20% higher than sales of the previous year, out of
which 20% sales was cash sales.
Total sales during the year 2009-10 were Rs.5,00,000
(2) Payments for all the purchases were made by cheques only.
(3) Goods were sold for cash and credit both. Credit customers pay by cheques only.
(4) Depreciation on furniture is to be charged 10% p.a
(5) Mr. A sent to the bank the collection of the months at the last day of each month after paying salary of
Rs.2,000 to the clerk, office expenses Rs.1,200 and personal expenses Rs.500

Analysis of bank pass book for the year ending 31st March, 2011 disclosed the following:
Payment to creditors 3,00,000
st
Payment of rent up to 31 March, 2011 16,000
Cash deposited into the bank during the year 80,000

The following are the balances on 31st March, 2011:

Rs.
Stock 1,60,000
Debtors 1,20,000
Creditors for goods 1,46,000
st
On the evening of 31 March 2011, the cashier absconded with the available cash in the case book.

You are required to prepare Trading and profit and loss a/c for the year ended 31st March 2011 and balance
sheet as on that date. All the workings should form part of your answer.
Ans: B/S= Rs.5,78,000 NP= Rs. 34,000 Cash Shortage= Rs. 23,600

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Q.No.6
Ram carried on business as retail merchant. He has not maintain regular account books however, he always
maintains Rs.10,000 in cash and deposited the balance into the bank account. He informs you that he has
sold goods at a profit of 25% on sales.

Following information is given to you:

As on 1.4.2007 As on 31.3.2008
Cash in Hand 10,000 10,000
Sundry Creditors 40,000 90,000
Cash at Bank 50,000 (Cr) 80,000 (Dr)
Sundry Debtors 1,00,000 3,50,000
Stock in Trade 2,80,000 ?

Analysis of his bank pass-book reveals in the following information:

(a) Payment to creditors Rs.7,00,000
(b) Payment for business expenses Rs.1,20,000
(c) Receipts from debtors Rs.7,50,000
(d) Loans from Laxman Rs.10,000 taken on 1.10.2007 at 10% per annum.
(e) Cash deposited in the bank Rs.1,00,000

He informs you that he paid creditors for goods Rs.20,000 in cash and salaries Rs.40,000 in cash. He has
drawn Rs.80,000 in cash for expenses.
During the year Ram had introduced some additional capital. Surplus Cash if any, to be taken as cash sales.
Prepare:
(i) Trading and profit and loss account for the years ended 31.3.2008
(ii) Balance Sheet as at 31st March, 2008
(iii) Ans: Op. Capital = Rs 3,00,000 B/S= Rs.5,60,000 NP= Rs.1,49,500
Q.No.7
The Books of Mr.Z showed the following information:
1.1.2007 31.12.2007
Bank Balance - 50,000
Debtors - 87,500
Creditors - 46,000
Stock 50,000 62,500
Fixed Assets 7,500 9,000

The following are the details of the bank transactions:

Rs.
Receipt from customer 3,40,000
Payment to creditors 2,80,000
Capital brought in 5,000
Sale of fixed assets 1,750
Expenses paid 49,250
Drawings 25,000
Purchase of fixed assets 5,000

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Other information:
(i) Cost of goods sold = 2,60,000
(ii) Gross profit 25% on cost of goods sold
(iii) Book value of Assets sold = 2,500
Prepare Trading, Profit & Loss account for the year ended 31.12.2007 and balance sheet as at 31.12.2007

Q.No.8
The Statement of Affairs of Mr.Misfortune on sunday, the 31st December was as follows:

Rs. Rs,
Capital 50,000 Fixed Assets 30,000
Sundry Creditors 10,000 Stock 10,000
Liability for expenses 1,000 Debtors 15,000
Bank 5,000
Cash 1,000
Mr.Misfortune did not maintain his books on the Double Entry System. But he carefully follows the
following system
(a) Every week he has drawn Rs.200
(b) After meeting his weekly sundry expenses (Rs. 100 on average) and his drawings, the balance of
weekly collections is banked at the commencement of the next week.
(c) No cash Purchase is made and creditors are paid by cheques.
(d) Sales are at fixed price which include 20% profit on sales.
(e) Credit sales are few and are noted in a diary. Payments are received in cheques only from such parties.
(f) Expenses other than sundries and other special drawings are made in cheques.
(g) All unpaid bills are kept in a file carefully.

Rs Rs
Balance on Jan 1 5,000 Creditors paid 40,000
Cheques deposited 2,000 Rent Paid 600
Cash Deposited 42,000 Expenses (Other than sundry 3,000
Expenses)
Balance on April 1 5,400
49,000 49,000

After 13 week on 1st April (Monday) the entire cash was missing when it was to be deposited in the bank.
The following further facts are ascertained.
(a) Stock on that day was valued at Rs.4,000
(b) Sundry debtors amounted to Rs.20,000 as per diary
(c) Sundry Creditors were Rs.8,000 as per unpaid bills file.
Find out the amount of cash missing.
Ans: Missing Cash= Rs. 3,100
Q.No.9
“A” and “B” are in partnership sharing Profits and Losses equally. They Keep their books by Single entry
System. The following balances are available from their books as on 31.3.2006 and 31.3.2007:
31.3.2006 31.3.2007
Building 1,50,000 1,50,000
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Equipment’s 2,40,000 2,72,000
Furniture 25,000 25,000
Debtors ? 1,00,000
Creditors 65,000 ?
Stock ? 70,000
Bank Loan 45,000 35,000
Cash 60,000 ?

The transactions during the year ended 31.3.2007 were the following:
Rs.
Collection from Debtors 3,80,000
Payment to creditors 2,50,000
Cash Purchases 65,000
Expenses paid 40,000
Drawings by ‘A’ 30,000

On 1.4.2006 an equipment of Book value Rs.20,000 was sold for Rs.15,000. On 1.10.2006 some
equipments were purchased.
Cash sales amounted to 10% of sales
Credit Sales amounted to Rs.4,50,000.
Credit purchase were 80% of total purchases.
The Firm sells goods at cost plus 25%
Discount allowed Rs.5,500 during the year
Discount earned Rs.4,800 during the year
Outstanding expenses Rs.3,000 as on 31.3.2007

Capital of ‘A’ as on 31.3.2006 was Rs.15,000 more than the capital of B. Equipments and Furniture to be
depreciated at 10% p.a and Building @ 2% p.a
You are required to prepare :
(i) Trading and profit and loss a/c for the’ year ended 31.3.2007 and
(ii) The balance sheet as on that date.
Ans: Op. Capital A= Rs. 2,80,250 B= 2,65,250 B/S= Rs.6,44,900 NP= Rs. 21,200
Q.No.10
The following is the balance sheet of a concern on 31st March 2010:

Rs Rs
Capital 10,00,000 Fixed Assets 4,00,000
Creditors (trade) 1,40,000 Stock 3,00,000
Profit & Loss A/c 60,000 Debtors 1,50,000
Cash & Bank 3,50,000
12,00,000 12,00,000

The management Estimates the purchases and sales for the year ended 31st March, 2011 as under:
Upto 28.2.2011 March 2011
(Rs.) (Rs.)
Purchases 14,10,000 1,10,000
Sales 19,20,000 2,00,000
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It was decided to invest Rs.1,00,000 in purchases of fixed assets, which are depreciated @ 10% on cost.
The time lag for payment to trade Creditors for purchases and receipt from sales is one month. The business
earns a gross profit of 30% on turnover. The expenses against gross profit amounts to 10% of the turnover.
The amount of depreciation is not included in these expenses.
Draft a balance sheet as on 31st March 2011 assuming that creditors are all Trade creditors for purchases
and debtors for sales and there is no other item of current assets and liabilities apart from stock and cash
and bank balances. (June 2018, 10 Marks)
Ans: B/S= Rs.15,44,000 NP= Rs. 3,74,000
Q.No.11
The following information relates to the business of Mr.Shiv Kumar, who requests you to prepare a Trading
and Profit & Loss Account for the year ended 31st March, 2003 and a Balance sheet as on that date:

(a)
Balance as on 31st March, Balance as on 31st
2002 March,2003
Building 3,20,000 3,60,000
Furniture 60,000 68,000
Motor Car 80,000 80,000
Stocks 40,000
Bills Payable 28,000 16,000
Cash and Bank 1,80,000 1,04,000
balances
Sundry Debtors 1,60,000
Bills Receivable 32,000 28,000
Sundry Creditors 1,20,000
(b) Cash transactions during the year included the following besides certain other items:
Rs. Rs.
Sale of old papers and 20,000 Cash Purchases 48,000
Miscellaneous income
Miscellaneous Trade 80,000 Payment to Creditors 1,84,000
expenses (Including
salaries etc)
Collection from debtors 2,00,000 Cash Sales 80,000
(c) Other information:
1) Bills receivable drawn during the year amount to Rs.20,000 and Bills payable accepted Rs.16,000
2) Some items of old furniture, whose written down value on 31st March, 2002 was Rs.20,000 was sold
on 30th September, 2002 for Rs.8,000. Depreciation is to be provided on building and furniture @ 10%
p.a and on Motor Car @ 20% p.a. Depreciation on sale of furniture to be provided for 6 months and for
additions to building for whole year.
3) Of the Debtors, a sum of Rs.8,000 should be written off as Bad Debts and a Reserve for Doubtful debts
is to be provided @ 2%.
4) Mr. Shiv Kumar has been maintained a steady gross rate of 30% on turnover.
5) Outstanding salary on 31st March, 2002 was Rs.8,000 and on 31st March, 2003 was Rs.10,000. On 31st
March, 2002, profit and Loss Account had a credit balance of Rs.40,000.
6) 20% of total sales and total purchase are to be treated as for cash.
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7) Additions in Furniture Account took place in the beginning of the year and there was no opening
provision for doubtful debts.
Ans: Op. Capital = Rs 7,16,000 B/S= Rs.8,68,160 N/loss= Rs. 25,840

Q.No.12
Mr Prachanda maintains Accounts under Singe Entry System and furnishes the following information for
the year ending 31st Ashad; 2070:

Particular 01.04.2069 31.03.2070

Rs. Rs.
Bank Balance 28,000 -
Stock 30,000 40,000
Debtors 45,000 33,000
Furniture (After Depreciation) 15,000 18,000
Building 1,50,000 -
Creditors 32,000 36,000
 Cost of Goods sold during the year was Rs. 360,000, which constituted 75% of the sales for the year.
The rate of Gross Profit is 25% 0n sales.
 All purchases and sales on credit and amounts received from customers and payments to suppliers are
by cheque.
 Mr Prachanda realized Rs. 10,000 in cash on the sale of scrap from which he paid Rs. 6,000 as freight
on purchases and the balance was retained for his personal use.

Details of his other transactions with the bank are as under:

Receipts Rs
Sales of private Investment brought in a Capital 1,50,000
Sales of Office Furniture ( Book value Rs. 1,000 ) 800
Payments
10% Govt. Bonds (Face value Rs 1, 40,000 purchased on 01.10.2069) 1,50,000
Salaries 60,000
Tax expenses (11 months ending 30.02.2070) 11,000
Printing and Stationery 7,800
Miscellaneous Expenses 12,000
Drawings 26,000

Bad Debts written off during the year were Rs 7,000. Furniture has been depreciated by 10% and Buildings
is to be depreciated by 2 %. The shop assistant is entitled to a commission of 10% of net profit after
charging his commission.
Prepare the trading and statement of Profit or Loss of his business for the year ending 31st Ashadh, 2070
and the Statement of Financial Position as on that date.
Ans: NP= Rs.30,000 Op.Capital = Rs-2,36,000 B/S = Rs.-4,26,000

Q.No.13
The following is the Balance Sheet of Sri Dev as on 31st March,2001:
Balance Sheet
Liabilities Rs. Assets Rs.
Capital Account 2,52,500 Machinery 1,20,000
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Sundry Creditors for 45,000 Furniture 20,000
Purchase
Stock 33,000
Debtors 1,00,000
Cash in Hand 8,000
Cash at Bank 16,500
2,97,500 2,97,500

Riots occurred and fire broke out on the evening of 31st March, 2002 destroying the books of account and
Furniture. The cashier was grievously hurt and the cash available in the cash box was stolen.
The trader gives you the following information:
1) Sales are affected as 25% for cash and the balance on credit. His total sales for the year ended 31st
March, 2002 were 20% higher than the previous year. All the sales and purchases of goods were evenly
spread throughout (as also in the last year).
2) Terms of credit
Debtors 2 Months
Creditors 1 Month
3) Stock level was maintained at Rs.33,000 all throughout the year.
4) A steady Gross Profit rate of 25% on the turnover was maintained throughout. Creditors are paid by
cheques only, Except for cash purchase of Rs.50,000
5) His private Records and the Bank Pass Book disclosed the following transaction for the year.
(i) Miscellaneous Business expenses Rs.1,57,500 (Including Rs.5,000 paid by cheque and Rs.7,500
st
was outstanding as on 31 March,2002)
(ii) Repairs Rs.3,500 (Paid by cash)
(iii)Addition to machinery Rs.60,000 (Paid by cheque)
(iv) Private drawings Rs.30,000 (Paid by Cash)
(v) Travelling Expenses Rs.18,000 (Paid by cash)
(vi) Introduction of additional Capital
By depositing in to the bank Rs.5,000
6) Collection from debtors was all through cheques
7) Depreciation on machinery is to be provided @ 15% on the closing book Value
8) The cash stolen is to be charged to the profit and Loss Account
9) Loss of furniture is to be adjusted from the capital Account.
Prepare Trading, profit and loss account for the year and SOFP on that Date.
Ans: NP= Rs. 32,500 B/S= Rs.3,06,000
Q.No.14
The following incomplete information of X ltd are given below:

Trading and profit & loss account for the year ended 31st March 2008
Rs. (‘000) Rs (‘000)
To opening Stock 700 By sales ?
To purchase ? By closing Stock ?
To direct Expenses 175
To gross profit C/d ?

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To Establishment 740 By Gross Profit b/d ?
Expenses
To interest on loan 60 By Commission 100
To provision for ?
Taxation
To Net profit b/d ?

To proposed Dividend ? By Balance b/f 140

To Transfer to general ? By Net Profit b/d ?
reserve
To Balance transferred ?
to Balance sheet

Balance Sheet as on 31st March 2008

Liabilities Amt Assets Amount
(Rs’000) (Rs’000)
Paid up share capital 1,000 Fixed Assets:
Plant & Machinery 1400
Other Fixed Assets ?
General Reserve: Current Assets:
Balance at the beginning ?? Stock ??
of the year Sundry Debtors ??
Cash at Bank 125
Proposed addition ??
Profit and loss a/c ??
10% Loan A/c ??
Current Liability ??
Other Information:
(i) Current ratio is 2:1
(ii) Closing stock is 25% of sales
(iii) Proposed dividend to paid-up Capital Ratio is 2:3
(iv) Gross profit ratio is 60% of turnover.
(v) Loan is half of the current liabilities.
(vi) Transfer to general reserves to proposed dividend ratio is 1:1
(vii) Profit carried forward is 10% of proposed dividends
(viii) Provision for taxation is equal to the amount of net profit of the year
(ix) Balance to credit of general reserve at the beginning of the year is twice the amount transferred to
that account from the current year’s profits.

All working notes should be part of your answer. You are required to complete:
(i) Trading and profit and loss account for the year ended 31st March, 2008 and
(ii) The Balance Sheet as on that date.
Ans: NP= Rs. 1,260 B/S= Rs.4,866.67

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Q.No.15
ShriKisan, a farmer , maintains a cash book, through which he records all receipt and payments and a diary
in which he records other relevant information. On 31st March, 1999 he had cash in hand Rs.1,000 and
balance of 500 with local Garmeen Bank. He also owed Rs.600 to BeejBhandar for seed purchased by that
dat.

During the year ended 31st March, 2000 he realized:

Rs
Sales proceed of crops 59,100
Sale proceeds of cattle products 12,500
Sale proceeds of wood and grass 3,000
Sale of cow dung 5,000
Receipt on account from babu (a credit customer) 12,000
Grant from ZilaParishad for installing tube well-cheque 10,000

During the year ended 31st March, 2000 he paid:

Wages 65,000
Beejbhandar 600
Seeds, feeds and fertilizer 3,000
Power 5,000
Land revenue 2,000
Tools Purchased 2,500
House hold expenses 10,000

During the year ended 31st March, 2000 his other transactions were:
(i) Sale of crop to babu on credit Rs.20,000
(ii) Purchase on 25th March, 2000 from beejBhandar on Credit of month seeds of Rs.2,000
(iii) Efforts put in by self and family members on the farm were conservatively valued at Rs.60,000
(iv) Value of crop used for consumption by:
Self and family Rs.30,000
Agricultural Labourers Rs.40,000
st
On 31 March, 2000, his cash in hand was only Rs.2,500.
The rest was banked. He did not have any stock of seeds.
The tubewell for which the grant cheque was realized in the last week of March, 2000 is to be installed in
April, 2000
Shrikisan asks you to prepare his cash and income summarises for the year ended 31st March, 2000 and his
statement of financial position as on that date.
Ans: N loss= Rs. 7,400 B/S= Rs.25,500 Op. Capital= Rs. 900

Q.No.16
The Closing capital of Mr.B as on 31-3-2010 was Rs.4,00,000. On 1-4-2009 his capital was Rs.3,50,000.
His net profit for the year ended 31-3-2010 was Rs.1,00,000. He introduced Rs.30,000 as additional
Capital in February, 2010. Find out the amount drawn by Mr.B for his domestic expenses.

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Q.No.17
The Closing Capital of Mr.A on 31.3.2007 was Rs.1,50,000. On 1.4.2006 his capital was Rs.60,000. During
the year he had, drawn Rs.40,000 for domestic expenses. He introduced Rs.25,000 as additional capital in
February, 2007. Find out his net profit for the year.

Q.No.18
The income Tax officer assuming the income of Shri Moti for the financial years 2009-10 and 2010-11
feels that shree moti has not disclosed the full income. He gives you the following particulars of assets and
liabilities of shri moti on 1st April 2009 and 1st April 2011.

Rs.
1-4-2009 Assets: Cash in hand 25,500
Stock 56,000
Sundry Debtors 41,500
Land and Building 1,98,000
Wife’s Jewellery 75,000

Liabilities Owing to Moti’s Brother 40,000

Sundry Creditors 35,000

1-4-2011 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

Liabilites Sundry creditors 55,000

During the two years the domestic expenditure was Rs.4,000 pm. The declared income of the financial
years were Rs.1,05,000 for 2009-10 and Rs.1,23,000 for 2010-11 respectively.
State whether the income-tax Officers contention is correct. Explain by giving your workings.
Ans: Suspended Income: Rs. 1,12,000

Q.No.19
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 money from a bank to which he has to
render figures of profits every year. He has given the bank the following profit figures:

Year ending 31st December Profit (Rs.)

1987 20,000
1988 32,000
1989 35,000
1990 48,000
1991 55,000
The bank appoints you to audit the statements and verify whether the figures of profit reported are correct
or not, for this purpose, the following figures are made available to you:

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st
(a) Position as on 31 December 1986: Sundry Debtors Rs.20,000; Stock on trade (at 95% of the cost)
Rs.47,500; Cash on 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, 1986 on which he had agreed to pay
simple interest at12% p.a. The loan was repaid along with interest on 31st December, 1988.
(c) In December, 1987, he had advanced Rs.8,000 to A for purchase of a vacant land. The property was
registered I march, 1989 after payment of balance consideration of Rs.32,000. Costs of registration
incurred for this were rs.7,500.
(d) Suresh purchased jewellery for Rs.15,000 for his daughter in October, 1989, marriage expenses
incurred in January, 1990 were Rs.24,000.
(e) A new D.V.D was purchased by him in march 1991 for Rs. 18,000 and presented by him to his
friends in November 1991.
(f) His annual households expenses amounted to a minimum of rs.24,000
(g) The position of assets and liabilities as on 31st December 1991 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 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 on, hand Rs.250.

It is found that the rate of profit has been uniform throughout the period and the proportion of sales during
the years to total sales during the years to total sales for the period was in the ratio of 3:4:4:6:8
Ascertain the annual profit and indicate differences, if any, with those reported by suresh to the bank
earlier.
All workings are to form part of your answer.
Ans: NP= Rs. 2,08,500 Op.Capital=Rs. -69,850
Q.No.20
The following information pertains to the business of Mr. Mohan for the year ended on 31st Ashadh , 2069.
You have been requested to prepare for him a Trading and Statement of Profit or Loss for the ended on
Ashadh 31st , 2069 and a Statement of Financial Position as on that date.
a. Assets and Liabilities as on 31st Ashadh , 2068:
Rs Rs
Bills Recivable 50,000 Buildings 1, 40,000
Debtors ?? Creditors 72,000
Stock- in trade 1, 50,000 Bills Payable 32,000
Machinery 94,000
b. Summarized cash transactions for the year ended 31st Ashadh , 2069
Particular Rs Particular Rs

To Cash balance as on 1-4 2068 1,400 By Bank overdraft as on 1-4- 10,000

To Receipts from Debtors 5,80,000 2068
To Bills Receivables 2,00,000 By Salaries 24,000
By Bills payable 2,86,000
By Wages 31,600
By Payments to Creditors 2,94,000
By Office Expenses 16,000
By Drawings 90,000
By Balance as os 31-3-2069
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In Hand 4,800 29,800
At Bank 25,000

Total 7,81,400 Total 7,81,400

c. Other Information:
Rs Rs
Sales 8,14,000 Bills Receivable received
during the year 2,18,000
Discount to customers 4,000 Bills payable issued
during the year 3,00,000
Purchases 6, 00,000 Stock-in- Trade as on 31-3-2069 1,06,000
Discount allowed by suppliers 2,000 Sundry Debtors on as 31-3-2069 90,000
Provide depreciation on Plant and Machinery at 15% and on Land and Building at 5%.
Ans: NP= Rs. 75,300 B/S= Rs.5,06,700

Q.No.21
Dear Mr. Pranjal,
I am most relieved that you have agreed to assist me by sorting out the financial affairs of my second-hand
business, which as you know, commenced on 1 Shrawan 2069. Such records as I have kept are, unfortunately,
to be found on now rather scruffy scraps of paper stored in a large cardboard box.
Doubtless, you will want to examine these records for yourself, but I thought it might assist you if I were to
summarize my business dealing up to 31 Ashadh 2070 as I recall them.
In Ashadh 2069, I was luckily enough to win Rs. 5,000 on the football pools, and this, together with Rs. 1,000
loaned to be my a friend – 1 agreed, incidentally, to pay him 10% per year interest - formed the initial capital
of Rs. 6,000. I put Rs. 5,500 into the bank immediately, in a separate business account, I needed a lorry to
enable me to collect and deliver the second-hand goods, a dealer was asking Rs. 1,300 for a secondhand lorry,
but I beat him down to Rs. 840. I’ve only paid by cheque Rs. 200 of this so far, but as I will finish paying the
full Rs. 840 in three years, it will be mine before it falls to pieces in another five years from now.
I rent some business premises, and, as they are fairly falling down, I only pay Rs. 350 a year. I’ve paid by
cheque this year’s rent and also Rs. 50 in respect of next year.
My first bit of business was to buy a job lot of 2,000 pairs of jeans for Rs. 6,000. I’ve paid a cheque for Rs.
4,000 so far, and my supplier is pressing me for the balance. To date, I’ve sold 1,500 pairs and received Rs.
5,800 but I reckon I am still owned Rs. 500, most of which I should be able to collect. I promptly banked the
Rs. 5,800 as it was all in cheques.
I brought 800 T-shirt for Rs. 1,200 out of my Bank Account. I have sold 700 of these for cash - Rs. 1,500 in
all – but as the remainder have got damaged, I will be lucky if I get Rs. 50 for them.
I managed to get some pocket calculator cheaply. 50 of them only cost me Rs. 400, but I’m rather pleased I
haven’t paid for them yet, as I think there is something wrong with them. My supplier has indicated that he
will in face accept Rs. 200 for them, and I intend take up his offer, as I reckon I can repair them for Re. 1
each and sell them at Rs. 8 a time – a good profit.
I haven’t paid my cash into the bank at all, as the cash I got for the T-shirts and my initial float enabled me
to pay for my petrol Rs. 400 and odd expenses Rs. 250. Also, it enabled me to draw Rs. 20 per week for
myself. As I have done so well, I also took my wife on holiday; it made a bit of a hole in the Bank Account
but it was worth all Rs. 600 of it.

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Perhaps, from what I have told you, you can work out what profit I have made, only keep as small as possible
as I don’t want to pay too much tax.

Yours sincerely,
Dhurmuse Kumar

Required: from the data provided by Mr. Dhurmus Kumar prepare a business Trading and Profit & Loss
Account for the period ended 31 Ashadh 2070 and a Balance Sheet as on that date. Show clearly all your
workings and assumptions as notes to the accounts. (Assume 10% provision for doubtful debts)
GP=Rs. 2,150 NP= Rs. 860 B/S = Rs. 8,160
Q.No.22
Nabil operates a warehouse selling wall papers direct to the public on strictly cash basis. On 1st Shrawan,
2070 a serious fire at his premises destroyed or damaged all his stock and most of his accounting and stock
records. He has asked you to calculate the cost of stocks so that he can make an insurance claim. He has
also asked you to establish whether he has trading profitably in the period from 1st Magh, 2069 to the date
of the fire, so that he can decide whether to start trading again in this line.

You obtain the following information in connection with his trading activities:
i. Nabil obtain supplies of wall papers from two companies only Mega ltd and Janta Ltd. Both the
companies supply Nabil with goods at recommended retail price ( R.R.P.) less 33 1/3 %. A cash
discount of 10% is given on this net price for payment within two weeks, which Nabil always takes.
ii. Both suppliers give an extra bulk rebate based on the value of goods purchased over the winter
months from 1st Magh to 31st Ashadh. The rebate from Mega Ltd. Amount to 5% R.R.P for goods
purchased excluding the first Rs. 25,000 in the winter month. Janta Ltd. gives rebate 8% on R.R.P
for goods purchased excluding the first Rs. 37,500 in those months.
iii. The bulk rebate for the six months to 31st Ashadh, 2070 was received in Shrawan, 2070 and
amounted to Rs. 4,100 in respect of purchases from Mega Ltd. and 3,800 in respect of purchase
from Janta Ltd.
iv. Nabil sells all goods at a price, which gives a gross profit equal to 25% of the cost of goods, before
deducting either the cash discount or bulk rebate.
v. General expenses paid out of cash sales prior to banking are estimated at following monthly
amounts:
Salaries & Wages 1,470
Motor expenses 218
Sundry expenses 105
Drawing by Nabil 150
vi. Information obtained from paid cheques and bank statements showed bank deposits from sales of
Rs. 1, 62,362, general overheads of Rs. 27,452 and two quarterly rent payments of Rs. 1,500 each.
vii. Fixtures which cost Rs 8,000 and Vechiles which cost 7,600 are to be depreciated at the rate of 15%
and 25% per annum respectively.
viii. In Baishakh, 2070 Nabil used wall paper, which cost before deducting either the bulk rebateor cash
discount Rs. 180 in decorating his own house.
ix. The stock held by Nabil on 30th Poush, 2069 has a cost before deduction of any rebates or discounts
of Rs. 56,807.

You are required to:

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a) Calculate the cost before deduction of any rebate or discounts of Nabil’s stock on 31.03.2070.
b) Prepare a trading and Statement of Profit or Loss for the six months to 31.03.2070.

Q.No.23
During July 2012, Purwanchal Ltd. agreed to acquire the business of Dharane Traders as on June 30, 2012
and take over all his assets (other than any balance at bank and cash) and to discharge his creditors. The
purchase price is to be the book value of assets taken over less liability subject to:
a. An addition of Rs. 10,000 for goodwill.
b. An increase of 20% in book value of the fixtures and fittings, and
c. A deduction of 5% from total of debtors to allow for possible bad debts.
The purchase price is to be satisfied by the issue to Dharane Traders fully paid share of Rs. 10 each in
Purwanchal Ltd, at their market value of Rs. 12.50 per share and any fraction amount in cash.
Having being instructed to determine the purchase price you ascertain the followings:
i. No balance sheet has been prepared as on june, 30 2012, the last one being that on march 31, 2012
which showed the following position:
Rs. Rs.
Capital 27,850 Furniture & Fittings 16,000
Creditors 6,200 Stock in trade 14,700
Debtors 2,700
Balance at Bank 600
Cash in hand 50
34,050 34,050
ii. Dharane traders kept no proper set of books, but there is available a file of unpaid supplier’s invoices
and a notebook of debtors for credit sales.
iii. Stock has not been taken on june 30, 2012 but it was agreed that is should be taken to be such an
amount as would produce a gross profit percentage on sales of 33.33% for the three months ended
june 30,2012.
iv. An analysis of the bank account for the three months ended june 30, 2012 shows
Rs. Rs.
Paid into bank cheques 18,400 Cheques drawn suppliers 17,050
from
Credit customers
Cash deposited 6,570 Expenses (including Rent) 1,540
Drawings 700
New fittings 600

v. Payments out of takings during the 3 months were: Cash purchase Rs.950, Expenses Rs.650, and
drawings Rs.100.
vi. After retaining a float of Rs.50, Dharane Traders paid into the bank at the end of each day the
balance of his cash takings.
vii. On june, 30 2012 creditors amounted to Rs. 6,400 and debtors to Rs. 3,600.
viii. It was agreed that depreciation and taxation should be ignored.
You are required:
a. To prepare Dharane Traders Profit & Loss Account for the three months ended June 30, 2012 and his
Statement of Financial Position on that Date.
b. To compute the purchase price payable and show how it is to be satisfied.
Ans: NP= Rs. 7000 B/S= Rs. 40,450 Total Pc. = Rs. 41,460

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Q.No.24
Mr. Hari Khadka runs a whole sale business where all purchases and sales are made on credit,He furnishes
the following closing balance.
31-12-2011 31-12-2012
Sundry Debtors 70,000 92000
Bills Receivable 15000 6000
Bills Payable 12000 14000
Sundry Creditors 40000 56000
Stock 110000 190000
Bank 90000 87000
Cash 5200 5300
Summary of the Cash transactions during the year 2012
i) Deposited to bank after payment of shop expenses @600p.m:, wages @ Rs 9,200 pm and personal
expenses @1400 pm Rs 7,62,750.
ii) Withdrawals Rs 1,21,000
iii) Cash payment to suppliers Rs 77,200 for suppliers and RS 25000 for furniture.
iv) Cheque collected form customers but dishonoured Rs 5,700
v) Bills accepted by customers RS.40,000
vi) Bills endorsed Rs 10,000
vii) Bills discounted Rs. 20,000 and discount Rs 750
viii) Bills matured and duly collected Rs 16,000
ix) Bills accepted Rs 24000
x) Paid to suppliers by cheque Rs. 3,20,000
xi) Received Rs 20,000 on maturity of one life insurance policy of Mr.Hari Khadka by cheque.
xii) Rent received Rs. 14000 by cheque
xiii) A building was purchased on 30-11-2012 for opening a branch for Rs 3,50,000 and some
expenses were incurred the details of which are not maintained.
xiv) Elecricity and telephone bills paid by cash Rs.18,700; due Rs.2,200
Other transactions;
a. Claim against the firm for damages Rs.1,55,000 is under legal dispute .Legal expenses
Rs.17,000.The firm anticipates defeat in the suit.
b. Good returned to suppliers Rs.4,200
c. Good returned by customes Rs.1,200
d. Discount offers by suppliers Rs.2,700
e. Discount offers to customers Rs.2400
f. The business is carried on at the premises owned by Mr.Hari Khadka.50% of the ground floor
space is used for the business and rest 50% space is let out for an annual rent of Rs.20,000.
Prepare trading and profit and loss account of Mr.hari Khadka for the year ended 31-12-2012 and statement
of financial position as on that date.
Ans: GP= Rs. 4,78,250 NP= Rs.2,57,700 B/S= Rs. 7,77,300

Q.No.25
Mr. Bhandari commenced business as a cloth merchant on 1 Shrawan 2068 with a capital NRs. 20,000. On
the same day, he purchased furniture and fittings for NRs. 10,000 in cash. From the following particulars
obtained from his books kept on single entry, you are asked to prepare Financial Statements for the year
ended 31 Ashad 2069.
Sales (inclusive of Cash sales NRs. 47,000) 129,000

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Purchases (inclusive of Cash purchase NRs. 14,000) 101,000
Mr. Bhandari’s Drawings (50% Cloth) 13,200
Salaries paid to Staffs 12,300
Bad debts written off 500
Business Expenses paid 11,700
Mr. Bhandari took cloth worth NRs. 700 from the shop for private use and paid NRs. 500 to his son, but
omitted to record these transactions in his books. On 31 Ashad 2069, his sundry debtors were NRs. 5,200
and Sundry Creditors NRs. 13,600, Stock in hand on 31 Ashad 2069 was NRs. 18,550. .(July 2015/17)(10
Marks)
Ans: GP= Rs. 53,850 NP= Rs. 29,350

Q.No.26
Following are the balances extracted from the books of Mr. B. Birat, prepare Trading and Profit & Loss
Account for the year ended Ashadh 31, 2069 and the Balance Sheet as on that date:

Rs. Rs.
Purchase 40,00,000 Land 10,00,000
Sales 43,00,000 Motor Car 2,00,000
Sundry Debtors 2,25,000 Return Outwards 12,500
Building 1,00,000 Return Inwards 22,000
Furniture 50,000 Cash in Hand 8,000
Sundry Creditors 1,80,000 Cash at Bank 9,800
Wages 46,000 Bank Loans 4,50,000
Salaries 56,000 Bills Payable 18,000
Insurance 18,000 Opening Stock 2,28,000
Rent 40,500 Freight Inwards 8,000
Investment 1,00,000 Freight Outwards 7,000
Postage & telegram 1,800 Office Electricity 8,000
Travelling & Conveyance 2,400 Office Expenses 15,000
Interest on bank Loan 25,000 Sundry Income 10,000

Adjustments required:
a. Stock as on Ashadh 31, 2069 was valued at NRs. 450,000.
b. The market value of investment as on 31.03.2069 amounted NRs. 120,000.
c. Interest Accrued on investment amounted to NRs. 5,000.
d. Charge Depreciation on building at 5%, furniture at25% and vehicle at 20%.
e. Outstanding salaries amounts to NRs. 5,500; whereas prepaid rent amounts to NRs. 7,500.
f. Of the sundry debtors, NRs. 2,000 is bad and should be written off.
Ans: GP= Rs. 4,58,500 NP= Rs.2,42,300 B/S= Rs. 20,95,800 Capital= Rs. 12,00,000

Q.No.27
The following is the balance sheet of the retail business of Sri Srinivas as at 31st December 1998:

Liabilities Rs. Assets Rs.

Sri Srinivas Capital 1,00,000 Furniture & Fittings 10,000
Creditors for Goods 20,500 Stock 70,000
Outstanding Rent 1,000 Sundry Debtors 25,000
Cash at Bank 14,500
Cash in Hand 2,000
1,21,500 1,21,500
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You are furnished with the following information:

1. Sri Srinivas sells his goods at a profit of 20% on sales.
2. Goods are sold for cash and credit. Credit customers pay by cheque only.
3. Payment for purchase are always made by cheque.
4. It is the practice of Sri Srinivas to send to the bank every weekend the collections of the week after
paying every week salary of Rs. 300 to the clerk. Sundry expenses of Rs. 50 and personal expenses of
Rs. 100.

Analysis of the pass book for the 13 week period ending 31st March 1999 disclosed the following;
Payment to Creditors 75,000
Payments of rent up to 31.3.99 4,000
Amount deposited into the bank Rs. 1,25,000 (include Rs. 30,000 received from debtors by cheques)
The following are the balances on 31st March 1999
Stock Rs. 40,000
Debtors Rs. 30,000
Creditors for goods Rs. 36,500
On the evening of 31st March 1999 the cashier absconded with the available cash in the cash box. There
was no deposit in the week ended on that date
You are required to prepare a statement showing the amount of cash defalcated by the cashier and also a
profit and loss account for the period ended 31st march 1999 and a Balance sheet as on that date.

Q.No.28
Mr Sundar deals in wholesale business of food products in the name of Subdar Khadya Trading House. He
has employed an assistant to help him in collecting cash from his customers and depositing them into bank
account. He presented the following information of last financial year and availabledocuments and
information relating to transactions of current financial year.
i) As at the end of last financial year his capital was 2,,585,000 and he owed Rs. 620,000 to his
suppliers. He had shown Rs. 360,000 as value of furniture, Rs. 1,470,000 as stock in trade, Rs.
895,000 as receivable from customers, Rs. 435,000 as balance with bank and Rs. 45,000 as cash in
vault.
ii) From the memorandum books, it is seen that he has made total cash sales of Rs. 827,000 during the
current financial year but the credit sales are yet to be compiled.
iii) He informs you that all his sales are made with a mark-up of 25 percent on cost.
iv) During this financial year, his assistant had collected cash of Rs. 300,000 and cheques amounting
to Rs 1,540,000 from his credit customers, and Mr. Sundar had issued cheques amounting to Rs,
1,705,000 to his suppliers.
v) Bank statement showed a total of Rs 1,000,000 of cash lodged into bank in various date during this
financial year. Simiarly, he had drawan Rs. 70,000 from bank for his personal use, had paid Rs.
214,000 for sundry expenses and Rs 60,000 for rent to landlord.
vi) Mr. E was paid Rs. 95,000 in cash for purchases.
vii) His cash in vault was Rs. 35,000 at the end of the current financial year.
viii) At the end of the current financial year, he owed Rs. 640,000 to his suppliers and found
Rs.n930,000 as receivable from his customers.
ix) The stock was not taken at the end of the year.

Required:

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Prepare Statement of Profit or Loss and Statement of Financial Position of Mr. Sundar for this financial
year.
Ans: GP= Rs. 5,40,400 NP=Rs.2,24,400 B/S=Rs. 33,79,400 Cash Theft= 42,000

Q.No.29
From the following data , you are required to prepare a Trading and Statement of Profit or Loss for the year
ended 31st March, 2011 and a Statement of Financial Position as at that date. All workings should form part
of your answer.

As on 1st April 2010 As on 31st March 2011

Creditors 15,770 12,400
Sundry expenses outstanding 600 330
Sundry Assets 11,610 12,040
Stock in trade 8,040 11,120
Cash in hand and at bank 6,960 8,080
Trade debtors 17,870
Details relating to transactions in the year:
Cash and discount credited to debtors 64,000
Sales return 1,450
Bad Debts 420
Sales (cash and credit) 71,810
Discount allowed by trade creditors 700
Purchase returns 400
Additional capital-paid into bank 8,500
Realisations from debtors- paid into bank 62,500
Cash purchases 1,030
Cash expenses 9,570
Paid by cheque for machinery purchased 430
Household expenses drawn from Bank 3,180
Cash paid into Bank 5,000
Cash drawn from Bank 9,240
Cash in hand on 31-3-2011 1,200
Cheques issued to trade creditors 60,270

Q.No.30
Yuddha Raj is an unemployed science gradute with typewriting qualification. Being unable to get
employment for more than Rs. 500 p.m. he decided to start his own typewriting institute. He approached
Kumari Bank Limited which sanctioned him a loan of Rs. 20,000 0n 01.04.2067. His father gifted him Rs.
5,000 on 01.04.2067. He purchased 6 typewriters worth Rs 24,000. Unable to understand the accounts
properly, he seeks your help in preparing aStatement of Profit or Loss and Statement of Financial Position
relating to the year ending 31.03.2068. His Pass Book reveals the following:
Rs.
a) Expenses of the Institute 8,400
b) Salary to self 4,000
c) Monthly Fees Collected 32,700
d) Examination Fees Collected 4,200

The following are the additional details available:

1) During the year Yuddha Raj purchased a second- hand cycle costing Rs 400 from a student who
owed monthly fees of Rs. 100. The balance was paid. The cycle is used for the institute only.

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 Chapter-10 Accounting from Incomplete Records CA. Rajan Adhikari
2) Yuddha Raj helped a afriend by encashing a cheque for Rs. 1,000 which was dishonored. The
friend has so far repaid only Rs. 400.
3) Yuddha Raj has taken Rs. 600 per month for personal expenses in addition to his salary.
4) Yuddha Raj runs the institute from his house for which a rent of Rs. 600 p.m. is paid, 50% may
reasonably be allocated for his own living.
5) The following are outstanding as at end of 31.03.2068
Rs.
a) Fees Recivable 2,200
b) Expenses Payable 1,000
c) Salary to self for Jesthe and Ashadh.
d) Stock of stationary on hand 200

6) Provide Depreciation 20% 0n typewriters and cycle.

7) The loan from Bank is repayable at Rs. 500 p.m from the beginning of magh onwards. Interest is payable at
12% per annum in additional to instalments for principal.
8) Assume that all transactions are routed through Bank and no cash is handled.
Ans: NP= Rs.19,225 Bank Bal= Rs. 4,905 B/S = Rs. 27,425
Interest= Rs. 2,295 Bal Loan= Rs. 17,000

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