Question

Roshan, whose accounts are maintained by Single Entry System, acquired a retail business on 1st April, 2017. He had ₹ 40,000 of his own and he borrowed ₹ 20,000 from his wife. He paid ₹ 15,000 for Goodwill ₹ 5,000 for Furniture and ₹ 35,000 for Stock.
Total cash received by him during the financial year from the Debtors was ₹ 2,30,000. His payments were:
Purchases – ₹ 1,56,000
Salary and Wages – ₹ 21,400
Trade Expenses – ₹ 7,200
Rent:
For business premises – ₹ 5,920
For private house – ₹ 2,960
Payments made for domestic purposes and drawings – ₹ 26,400
At the end of the year, the Stock was ₹ 37,500. He owed ₹ 13,500 to Creditors for goods and his customers owed to him ₹ 15,000. Provide 5% for Depreciation on Furniture, Interest at 5% on wife’s Loan and ₹ 1,000 for Doubtful Debts.
Prepare the Cash Account, the Profit and Loss Account for the year ended 31st March, 2018 and the Balance Sheet at the close of the year.

Answer 1

Rishabh will bring his share of goodwill in cash.

(c) Buildings were appreciated by 20%.

(d) All Debtors were good.

(e) There was a liability of ₹ 10,800 included in Creditors which was not likely to arise.

(f) New profit-sharing ratio will be 2 : 1 : 1.

(g) Capital of Raghu and Rishu will be adjusted on the basis of Rishabh’s share of capital and any excess

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