Question

Kartik started a firm on 1st April, 2015 with a capital of Rs. 30,000. On 1st July 2015, he borrowed from his wife a sum of Rs. 12,000 @ $9\%$ per annum (interest not yet paid) for business and introduce a further capital of his own amounted to Rs. 4,500. On 31st March, 2016 his position was, cash Rs. 1,800, stock Rs. 28,200, debtors Rs. 21,000 and creditors Rs. 18,000.

Ascertain his profit or loss taking into account Rs 6,000 for his drawings during the year.

Answer 1

$\text{Statement of Affairs}\text{as at 31st March, 2016}\begin{array}{cccc}\text{Capital and Liabilities}& \text{Amt. (Rs.)}& \text{Assets}& \text{Amt. (Rs.)}\\ \text{Creditors}& 18,000& \text{Cash}& 1,800\\ \text{Mrs. Kartik's Loan}12,000& & \text{Stock}& 28,200\\ \text{(+) Interest or Loan}& & \text{Debtors}& 21,000\\ (12,000\times \frac{9}{100}\times \frac{9}{12})\underset{–}{810}& 12,810& & \\ \text{Capital (Balancing figure)}& 20,190& & \\ & \underset{–}{}& & \underset{–}{}\\ & \underset{–}{\underset{–}{51,000}}& & \underset{–}{\underset{–}{51,000}}\end{array}$

$\text{Statement Showing Profit or Loss}\text{for year ended 31st March, 2016}\begin{array}{cc}\text{Particulars}& \text{Amt. (Rs.)}\\ \text{Capital at the End}& 20,190\\ \text{(-)Capital Introduced During the year}& 4,500\\ & \overline{15,690}\\ \text{(+) Drawings}& 6,000\\ \text{Adjusted Capital at the End}& \overline{21,690}\\ \text{(-)Capital in the Beginning}& \underset{–}{30,000}\\ \text{Net Loss the Year}& \underset{–}{\underset{–}{(8,310)}}\\ & \end{array}$

Note: Loan from wife along with interest on loan is a liability for the business and not an additional capital.