Question

Mr. Akshat keeps his books on incomplete records. Following information is given below

$\begin{array}{ccc}\text{Items}& \text{April 1, 2004}& \text{April 1, 2004}\\ \text{Cash in hand}& 1,000& 1,500\\ \text{Cash at bank}& 15,000& 10,000\\ \text{Stock}& 1,00,000& 95,000\\ \text{Debtors}& 42,500& 70,000\\ \text{Business premises}& 75,000& 1,35,000\\ \text{Furniture}& 9,000& 7,500\\ \text{Creditors}& 66,000& 87,000\\ \text{Bills payable}& 44,000& 58,000\end{array}$

During the year, he withdrew Rs. 45,000 and introduced Rs. 25,000 as further capital in the business.
Compute the profit or loss of the business.

Answer 1

Note:
In the above case, opening and closing balance of capital is not given. Hence we have to prepare statement of affairs as at the beginning and end of the year.

Statement of Affairs

as on 1st April, 2004

$\begin{array}{cccc}\text{Capital and Liabilities}& \text{Amt. (Rs.)}& \text{Assets}& \text{Amt. (Rs.)}\\ \text{Creditors}& 66,000& \text{Cash in Hand}& 1,000\\ \text{Bills Payable}& 44,000& \text{Cash at Bank}& 15,000\\ \text{Capital(b/f)}& 1,32,500& \text{Stock}& 1,00,000\\ & & \text{Debtors}& 42,500\\ & & \text{Business Premises}& 75,000\\ & & \text{Furniture}& 9,000\\ & \underset{–}{\underset{–}{\overline{2,42,500}}}& & \underset{–}{\underset{–}{\overline{2,42,500}}}\end{array}$

Statement of Affairs

as on 31st March, 2005

$\begin{array}{cccc}\text{Capital and Liabilities}& \text{Amt. (Rs.)}& \text{Assets}& \text{Amt. (Rs.)}\\ \text{Creditors}& 87,000& \text{Cash in Hand}& 1,500\\ \text{Bills Payable}& 58,000& \text{Cash at Bank}& 10,000\\ \text{Capital (b/f)}& 1,74,000& \text{Stock}& 95,000\\ & & \text{Debtors}& 70,000\\ & & \text{Business Premises}& 1,35,000\\ & & \text{Furniture}& 7,500\\ & \underset{–}{\underset{–}{\overline{3,19,000}}}& & \underset{–}{\underset{–}{\overline{3,19,000}}}\end{array}$

Statement Showing Profit or Loss for the Year 2005

$\begin{array}{cc}\text{Particulars}& \text{Amt. (Rs.)}\\ \text{Capital at the end of the year on 31st March, 2005}& 1,74,000\\ (+)\text{Drawings during the year}& \underset{–}{45,000}\\ & 2,19,000\\ (-)\text{Capital introduced during the year}& \underset{–}{(25,000)}\\ & 1,94,000\\ (-)\text{Capital at the Beginning of the year 1st April 2004}& \underset{–}{(1,32,500)}\\ \text{Profit earned during the year}& \underset{–}{\underset{–}{61,500}}\end{array}$