Question

A retail Trader has not kept proper books of accounts. Ascertain his profit or loss for the year ending 31st March, 2017, and prepare a final statement of affairs from the following information:

			1st April, 2016	31st March, 2017
			₹	₹
Cash Balance			3,500	4,100
Bank Balance			Dr. 6,000	Cr. 15,000
Stock			22,000	36,400
Sundry Debtors			18,800	34,500
Sundry Creditors			12,100	8,000
Loan from X			–	10,000
Bills Receivable			4,000	–
Fixed Assets			40,000	60,000

He withdrew from the business ₹ 1,500 per month for his personal use and ₹ 8,000 for giving a personal loan to his brother. He also used a house for his personal purposes, the rent of which at the rate of ₹ 900 per month and electricity charges at an average rate of ₹ 250 per month were paid from the business account.
He had received a lottery prize of ₹ 25,000, out of which he invested half the amount in business.
He has not paid two months' salary to his clerk @ ₹ 1,200 per month, but insurance premium @ ₹ 600 per annum was paid on 1st October, 2016 to run for one year.
Loan from X was taken on 1st July, 2016 on which interest was unpaid @ 18% p.a.
Fixed assets are to be depreciated @ 10% p.a.

Answer 1

Statement of Affairs as on April 01, 2016
Liabilities	Amount (Rs)	Assets	Amount (Rs)
Creditors	12,100	Cash at Bank	6,000
Capital (Balancing Figure)	82,200	Stock	22,000
		Debtors	18,800
		Bills Receivable	4,000
		Fixed Assets	40,000
		Cash in Hand	3,500
	94,300		94,300

Statement of Affairs as on March 31, 2017
Liabilities	Amount (Rs)	Assets	Amount (Rs)
Loan from X	10,000	Stock	36,400
Creditors	8,000	Debtors	34,500
Bank Overdraft	15,000	Cash	4,100
Capital (Balancing Figure)	1,02,000	Fixed Assets	60,000
	1,35,000		1,35,000

Statement of Profit or Loss for the year ended March 31, 2017
Particulars		Amount (Rs)
Capital at the end of the year		1,02,000
	Add: Drawings made during the year (WN)	39,800
	Less: Additional capital introduced during the year $\left(\frac{25,000}{2}\right)$	12,500
Adjusted capital at the end of the year		1,29,300
	Less: Capital in the beginning of the year	82,200
Profit Before Adjustment		47,100
	Less: Depreciation on Fixed Assets	6,000
	Less: Outstanding Interest on Loan	1,350
	Less: Outstanding Salary	2,400
	Add: Prepaid Insurance	300
Profit made during the year		37,650

Final Statement of Affairs as on March 31, 2017
Liabilities		Amount (Rs)	Assets		Amount (Rs)
Creditors		8,000	Cash		4,100
Opening Capital	82,200		Stock		36,400
Add: Additional Capital	12,500		Debtors		34,500
Add: Net Profit	37,650		Prepaid Insurance		300
Less: Drawings	39,800	92,550	Fixed Assets	60,000
Outstanding Salary		2,400	Less: Depreciation	6,000	54,000
Loan from X		10,000
Bank Overdraft		15,000
Outstanding Interest on Loan		1,350
		1,29,300			1,29,300

Working Note: Calculation of Amount of Drawings

$\begin{array}{l}\text{Cash Withdrawn = Rs 18,000}\\ \text{Loan to Brother = Rs 8,0}00\\ \text{Rent = Rs 10,800}\\ \text{Electricity Charges = Rs 3,000}\\ \text{= Rs}\overline{\text{39,800}}\end{array}$