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Preparation of final accounts from incomplete records
When books of accounts are incomplete, information regarding revenues, expenses assets and liabilities is not known fully. Hence, it becomes difficult to prepare trading and profit and loss account and balance sheet. But with the available data, the missing figures can be found out and then the final accounts can be prepared.
Following are the steps to be followed to prepare final accounts from incomplete records:
1. Opening statement of affairs is to be prepared, to ascertain the opening capital.
2. Missing figures must be found out with the available data.
This can be done by preparing memorandum accounts or by making necessary adjustments to the existing figures. For example,
(a) It may become necessary to prepare a cash book to find out the missing items such as cash purchases, cash sales, etc.
(b) By preparing total debtors account and total creditors account, credit sales and credit purchases can be ascertained respectively.
(c) Bills receivable account and bills payable account are to be prepared to find out the balances of bills receivable received and bills payable accepted respectively.
3. The final step is to prepare trading and profit and loss account and balance sheet.
Formats of important accounts, that is, total debtors account, bills receivable account, total creditors account and bills payable account are given below:
Find out credit sales from the following information:
From the following details find out total sales made during the year.
= ₹ 1,40,000 + ₹ 1,90,000
= ₹ 3,30,000
From the following particulars, prepare bills receivable account and compute the bills received from the debtors.
From the following particulars, calculate total sales.
From the following details, calculate credit purchases.
From the following particulars calculate total purchases.
Total purchases = Cash purchases + Credit purchases
= ₹ 3,20,000 + ₹ 4,80,000 = ₹ 8,00,000
From the following
details you are required to calculate credit sales and credit purchases by
preparing total debtors account, total creditors account, bills receivable
account and bills payable account.
From the following details of Abdul who maintains incomplete records, prepare Trading and Profit and Loss account for the year ended 31st March, 2018 and a Balance Sheet as on the date.
Bharathi does not maintain her books of accounts under double entry system. From the following details prepare trading and profit and loss account for the year ending 31st March, 2019 and a balance sheet as on that date.
Additional information: ₹₹
(i) Credit purchases 74,000
(ii) Credit sales 1,40,000
(iii) Opening capital 2,22,000
(iv) Depreciate machinery by 10% p.a.
Arjun carries on grocery business and does not keep his books on double entry basis.
The following particulars have been extracted from his books:
Other information for the year ending 31-3-2019 showed the following:
Advertising ₹ 4,700
Carriage inwards ₹ 8,000
Cash paid to creditors ₹ 64,000
Drawings ₹ 2,000
Total sales during the year were ₹85,000. Purchases returns during the year were ₹ 2,000 and sales returns were ₹ 1,000. Depreciate plant and machinery by 5%. Provide ₹ 300 for doubtful debts. Prepare trading and profit and loss account for the year ending 31st March, 2019 and a balance sheet as on the date.
Pandian does not keep his books under double entry system. From the following information prepare trading and profit and loss account and balance sheet as on 31-12-2018.
Write off depreciation of 5% on furniture. Create a provision of 1% on debtors for doubtful debts.
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