Machinery Less Depreciation ( , ) , Less Drawings Cash , Goods , ( , ) , , , , , , Working Notes : (i) Total Debtors Account NIL , Sales (credit) , , , Bad debts , , , , , , (ii) Total Creditors Account , NIL Purchase credit , (iii) Statement of Affair as on December , Liabilities Assets Amounts Capital (balancing figure) , , Machinery , , , , (iv) Summary of Cash Receipts Payments Purchases Capital(bank) Wages , Salaries , Sales , Trade expenses , Electric bill , Drawings , , Balance c/d—cash Closing bank(balancing figure) , , , , , Test Your Understanding - II Write the correct word(s) : . Credit sales can be ascertained as the balancing figure in the..........account. . Excess of ..........over.........represents loss sustained during the period.
. To ascertain the profit, closing capital is to be adjusted by deducting ..........and adding .......... . Incomplete records are generally used by ..........
Illustration Mr. Bahadur does not know how to keep books of account. From his various records, the following particulars have been made available prepare the final Accounts, after providing for doubtful debts per cent of debtors outstanding and depreciating the motor car @ per cent. (i) Balance Sheet as on April , Liabilities Assets Capital , Motor Car , Bills payable , , , , , Cash in hand , , , , , (ii) Cash Transactions during the year Receipts Payments , Receipt from debtors , , Wages , , Purchases , Sales , , Drawings , Bills payable , General expenses , Payment to creditors , , , , , , (iii) Other Information Bills receivable drawn (received) , Discount to customers , Discount from suppliers Credit purchases , Closing stock , Closing balance of debtor , Closing balance of bills payable , Solution Cash sales and cash purchases are available from cash transactions.
Credit purchase is also given. But credit sale is to be ascertained by the opening debtors account. Though the credit purchase is available, the closing balance of creditors is not known. That is why the creditors account also has to be opened.