Single Entry: Practical Problems 🧮
Let's solve a problem using the Statement of Affairs Method.
Problem 📝
Mr. Raj keeps his books under Single Entry System. His position was as follows:
| Particulars | 1st Jan 2023 (₹) | 31st Dec 2023 (₹) |
|---|---|---|
| Cash in Hand | 1,000 | 1,500 |
| Stock | 10,000 | 15,000 |
| Debtors | 20,000 | 25,000 |
| Furniture | 5,000 | 5,000 |
| Creditors | 8,000 | 10,000 |
Additional Info:
- He withdrew ₹5,000 for personal use (Drawings).
- He introduced ₹2,000 as fresh capital.
- Depreciate Furniture by 10%.
Calculate Net Profit.
Solution 📊
Step 1: Find Opening Capital (1st Jan)
- Assets: 1,000 (Cash) + 10,000 (Stock) + 20,000 (Debtors) + 5,000 (Furniture) = 36,000.
- Liabilities: 8,000 (Creditors).
- Opening Capital = 36,000 - 8,000 = ₹28,000.
Step 2: Find Closing Capital (31st Dec)
- Assets: 1,500 (Cash) + 15,000 (Stock) + 25,000 (Debtors) + 5,000 (Furniture) = 46,500.
- Liabilities: 10,000 (Creditors).
- Closing Capital = 46,500 - 10,000 = ₹36,500.
Step 3: Statement of Profit
| Particulars | Amount (₹) |
|---|---|
| Closing Capital | 36,500 |
| Add: Drawings | 5,000 |
| Less: Additional Capital | (2,000) |
| Adjusted Closing Capital | 39,500 |
| Less: Opening Capital | (28,000) |
| Gross Profit | 11,500 |
| Less: Depreciation (10% of 5,000) | (500) |
| Net Profit | 11,000 |
🎉 UNIT IV COMPLETE! You have mastered Single Entry System. From incomplete records to finding the hidden profit.
Next epic: Unit V: Non-Profit Organisations - Accounting for Clubs and Charities! 🏥