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Standard XII

Accountancy

Hidden Goodwill

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Question

Find out the corrected net profit.
Profit before taking into account following adjustments was Rs. $7, 00, 000$
$1$ . Rs. $1, 00, 000$ spent on purchase of motor car for business purpose, treated as expenses in profit & loss A/c
$2$ . Rs. $15, 000$ p.m. rent outstanding for the month of February and March not taken into account.

Rs.

7, 70, 000

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Rs.

7, 85, 000

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Rs.

6, 15, 000

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Rs.

6, 30, 000

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Solution

The correct option is A Rs. $7, 70, 000$
Net profit before adjustment = 7,00,000
Add:- Capital expenditure wrongly debited = 1,00,000
Less:- Outstanding rent for 2 months (15,000 x 2) = (30,000)
-------------------
Net profit after adjustments = 7,70,000

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Similar questions

Q. PRACTICAL PROBLEMS

Mahendra Keeps his books by Single Entry System. His position on 1^st April 2012, was as follows : Cash in Hand Rs 7,900, Cash at Bank Rs 20,000, Debtors Rs 18,000. Stock Rs 29,000, Motor Car Rs 5,000, Bank Loan Rs 18,000 and Outstanding Expenses Rs 2,700.
On 1^st October, 2012 Mahendra introduced Rs 10,000 as further capital in the business and withdrew on the same date Rs 7,000 out of which he spent Rs 5,000 on the purchase of a Machinery for the business.
On 31^st March 2013 his position was as follows: Cash in Hand Rs 7,600, Cash at Bank Rs 22,000, Stock Rs 30,000 Debtors Rs 25,700, Furniture Rs 6,000, Creditors Rs 25,200, and prepaid expenses Rs 200.
Prepare a Statement showing the Profit or Loss made by him during the year ended 31^st March, 2013 and Opening and Closing Statement of affairs. Considered the following adjustments also.
1) Depreciate Motor Car and Furniture @ 10% p.a. Furniture was purchased on 1^st Oct., 2012.
2) Provide Rs 1,200 for Bad debts and provide 5% R.D.D.
3) Goods taken for personal use by Mahendra amounting to Rs 1,500
4) Provide interest on capital @ 10% p.a.

Outstanding expenses as at the end of the financial year are Rs. 40,000 which are given in adjustments. The profit before taking this into consideration is Rs. 8,00,000. What is the correct profit?

Q. C & D entered into a joint venture to construct a bridge. They did not open separate set of books. They shared profits and losses as

3 : 2

. C contributed Rs

1, 50, 000

for purchase of materials. D paid wages amounting to Rs

80, 000

. Other expenses were paid as:
C - Rs

5, 000

D - Rs

15, 000

C purchased one machine for Rs

20, 000

. The machine was taken over by C for Rs

10, 000

. Total contract value of Rs

3, 00, 000

was received by D. What will be the profit on venture?

Himanshu maintains his books on single entry system. His position was as under on 1st January 2012

Cash in hand Rs 600; Cash at Bank Rs 11,000; Stock Rs 11,200; Debtors Rs 6,914; Furniture Rs 400; Sundry Creditors Rs 8,114.

The position of Himanshu on 31st December 2012 was as follows:

Cash in hand Rs 760; Cash at Bank Rs 4,800; Stock Rs 9,360; Debtors Rs 9,240; Furniture Rs 500; Creditors Rs 6,000.

He withdrew Rs 13,000 from the business on 2nd January 2012 out of which he spent Rs 11,200 for purchasing of a motor-car for business. Taking the above into consideration, find out the profit of Himanshu.

Give the journal entries for the following adjustments-

(a)Outstanding salary Rs. 3,500.

(b)Rent unpaid for one month at Rs. 6,000 per annum.

(c)Insurance prepaid for a quarter at Rs. 16,000 per annum.

(d)Purchase of furniture costing Rs. 7,000 entered in the purchase book.

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The correct option is A Rs. 7,70,000Net profit before adjustment = 7,00,000Add:- Capital expenditure wrongly debited = 1,00,000Less:- Outstanding rent for 2 months (15,000 x 2) = (30,000) -------------------Net profit after adjustments = 7,70,000

The correct option is A Rs. $7, 70, 000$
Net profit before adjustment = 7,00,000
Add:- Capital expenditure wrongly debited = 1,00,000
Less:- Outstanding rent for 2 months (15,000 x 2) = (30,000)
-------------------
Net profit after adjustments = 7,70,000