Question

Mr. A started business with a capital Rs. 5,00,000. At the end of the year his position was-

$\begin{array}{cc}\text{Items}& \text{Amt. (Rs.)}\\ \text{Cash in hand}& 15,000\\ \text{Cash at bank}& 70,000\\ \text{Sundry debtors}& 1,20,000\\ \text{Stock}& 2,40,000\\ \text{Furniture}& 75,000\\ \text{Machinery}& 2,00,000\end{array}$

Sundry creditors on this date totalled Rs. 80,000. During the year, he introduced a further capital of Rs. 1,50,000 and withdrew for household expenses Rs. 90,000.

You are required to calculate profit or loss during the year.

Answer 1

$\text{Statement of Affairs}\text{as at the end of the year}\begin{array}{cccc}\text{Capital and Liabilities}& \text{Amt. (Rs.)}& \text{Assets}& \text{Amt (Rs)}\\ \text{Sundry Creditors}& 80,000& \text{Cash in Hand}& 15,000\\ \text{Capital (Balancing Figure)}& 6,40,000& \text{Cash at Bank}& 70,000\\ & & \text{Sundry Debtors}& 1,20,000\\ & & \text{Stock}& 2,40,000\\ & & \text{Furniture}& 75,000\\ & & \text{Machinery}& 2,00,000\\ & \overline{\underset{–}{\underset{–}{7,20,000}}}& & \overline{\underset{–}{\underset{–}{7,20,000}}}\end{array}$

$\text{Statement Showing Profit or Loss}\text{for year ended ....}\begin{array}{cc}\text{Particulars}& \text{Amt. (Rs.)}\\ \text{Capital at the End}& 6,40,000\\ \text{(+) Drawings (Household expenses)}& 90,000\\ & \overline{7,30,000}\\ \text{(-)Additional Capital Introduced}& \underset{–}{(1,50,000)}\\ \text{Adjusted Capital at the End}& 5,80,000\\ \text{(-) Capital in the Beginning}& \underset{–}{(5,00,000)}\\ \text{Profit for the year}& \underset{–}{\underset{–}{80,000}}\end{array}$