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Question

(a) Mohan started a business on 1st April, 2018 with a capital of ₹ 10,000 and borrowed ₹ 3,000 from a friend. He earned a profit of ₹ 5,000 during the year ended 31st March, 2019 and withdrew cash ₹ 4,000 for personal use. What is his capital on 31st March, 2019?

(b) Mahesh started a business with a capital of ₹ 15,000 on 1st April, 2018. During the year, he made a profit of ₹ 3,000. He owes ₹ 2,500 to suppliers of goods. What is the total of assets in his business on 31st March, 2019?

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Solution

(a) Capital on March 31, 2019 = Capital on April 01, 2018 + Profit − Drawings

= 10,000 + 5,000 − 4,000 = Rs 11,000

(b) Total Assets on March 31, 2019 = Capital on April 01, 2018 + Profit + Creditors

= 15,000 + 3,000 + 2,500 = Rs 20,500


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