Mr. Vasanth Reddy whose accounts are recorded by single entry only with Rs 10,000 lent by his wife and Rs 20,000 of his own; acquired a retail business of which he took possession on Apr 1, 2008.
Of the acquisition price Rs 7,500 was attributed to goodwill; Rs 2,500 to furniture, fixtures; Rs 17,500 to stock and Rs 2,500 was retained as working capital of which Rs 2,000 was paid into the bank. During the year his takings amounted to Rs 1,15,000 of which Rs 1,09,000 was paid into the bank, the remainder being in part utilised for cash payments. The payments out of the bank and cash during the year were:
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Purchases
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78,000
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Salary
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2,500
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Wages
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8,200
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Trade Expenses
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3,600
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Rent, Rates and Taxes-Business
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2,960
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Personal
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1,480
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Payments to Domestic use
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1,200
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Drawings
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12,000
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At the close of the year his stock was of the value of Rs 18,750; He owned Sundry creditors for goods Rs 6,750; there was an owing to him for goods sold Rs 7,500; The balance at the bank was Rs 2,750.
Provide 5% for depreciation on furniture, fittings; interest @ 5% p.a. on his wife's loan. Rs 500 for doubtful debts. Prepare the necessary final accounts for the year ending on Mar 31, 2009 and the Balance Sheet as on that date.