Question

Manu started business with a capital of ₹ 4,00,000 on 1st October, 2005. He borrowed from his friend a sum of ₹ 1,00,000. He brought further ₹ 75,000 as capital on 31st March, 2006, his position was:
Cash: ₹ 30,000; Stock: ₹ 4,70,000; Debtors: ₹ 3,50,000 and Creditors: ₹ 3,00,000.
He withdrew ₹ 8,000 per month during this period. Calculate profit on loss for the period.

Answer 1

Statement of Affairs for the year ending March 31, 2006
Liabilities	Amount Rs	Assets	Amount Rs
Creditors	3,00,000	Cash	30,000
Loan from Friend	1,00,000	Stock	4,70,000
		Debtors	3,50,000
Capital	4,50,000
(Balancing Figure)
	8,50,000		8,50,000

Statement of Profit and Loss for the year ending March 31, 2006
Particulars	Amount Rs
Capital as on March 31, 2006	4,50,000
Add: Drawings (8,000 × 6)	48,000
	4,98,000
Less: Additional Capital Introduced	(75,000)
Adjusted Capital as on March 31, 2006	4,23,000
Less: Capital as on Oct.01, 2005	(4,00,000)
Profit made during the year 2005-06	23,000