Question 19.
On 1st April, 2018, the position of Tendulkar was as follows: Stock-in-Hand ₹ 2,88,000; Bills Payable ₹ 48,000; Cash at Bank ₹ 2,16,000; Plant and Machinery ₹ 1,20,000; Owing by debtors ₹ 60,000; Owing to creditors ₹ 96,000; Investment ₹ 2,40,000; Loan from S.K. Garg ₹ 1,80,000. What was the amount of Tendulkar’s capital on the date? Show an opening Journal entry.
Answers
The Capital balance is Rs 600,000 and The opening Journal entry is shown below:
Explanation:
The Journal entry in the books of Tendulkar is as:
On April, 1 2018
Stock in hand A/c................................Dr Rs 288,000
Cash at bank A/c..................................Dr Rs 216,000
Debtors A/c............................................Dr Rs 60,000
Investments A/c.....................................Dr Rs 240,000
Plant and Machinery A/c......................Dr Rs 120,000
To Creditors A/c.................................Cr Rs 96,000
To Loans A/c.........................................Cr Rs 180,000
To Bills Payable A/c..............................Cr Rs 48,000
To Capital A/c..........................................Cr Rs 600,000
Being the balances of assets and liabilities are recorded and the capital balance is forward.
Working Note:
Capital Balance = Total of assets - Total of liabilities
= (Stock + Cash + investment + Debtors + Plant and Machinery) - (Creditors + Bills payable + Loans)
= (Rs288,000 + Rs216,000 + Rs60,000 + Rs240,000 + Rs 120,000) - (Rs 96,000 + Rs 180,000 + Rs 48,000)
= Rs 924,000 - Rs 324,000
Capital Balance = Rs 600,000