Question

Prakriti keeps her books of account under single entry system and supplied the following summary of assets and liabilities of his business for year ending 31st December, 2019: Vehicles........... Plant and machinery..... Fumiture... Inventories Loan. Additional information Rs.40,000 Rs.10,000 Account receivable.... Rs.16,000 Outstanding expenses. Rs.15,000 Cash and bank balance.. Create a provision for doubtful debts at 2% Depreciate furniture and machinery by 10%. Required: Closing statement of affairs to find out closing capital. Rs. 25,000 Rs.30,000 Rs.3,000 Rs.19,000 1.16.4001​

Answer 1

the closing capital for the business as of December 31, 2019, is Rs. 120,680.

Step-by-step explanation:

Based on the information provided, the closing statement of affairs to find out the closing capital is as follows:

Assets:

Vehicles: Rs. 40,000

Plant and machinery: Rs. 10,000

Furniture: Rs. 30,000 (less 10% depreciation = Rs. 27,000)

Inventories: Rs. 19,000

Account receivable: Rs. 16,000 (less provision for doubtful debts at 2% = Rs. 15,680)

Cash and bank balance: Rs. 25,000

Total assets: Rs. 138,680

Liabilities:

Loan: Rs. 3,000

Outstanding expenses: Rs. 15,000

Total liabilities: Rs. 18,000

Closing capital: Total assets - Total liabilities

= Rs. 138,680 - Rs. 18,000

= Rs. 120,680

Therefore, the closing capital for the business as of December 31, 2019, is Rs. 120,680.