Question

Mr. Ashok does not keep his books properly.
Following information is available from his books

$\begin{array}{ccc}\text{Items}& \text{Jan 1, 2005 (Rs.)}& \text{Dec 31, 2005 (Rs.)}\\ \text{Sundry Creditors}& 45,000& 93,000\\ \text{Loan from wife}& 66,000& 57,000\\ \text{Sundry Debtors}& 22,500& \underset{–}{}\\ \text{Land and Building}& 89,600& 90,000\\ \text{Cash in hand}& 7,500& 8,700\\ \text{Bank overdraft}& 25,000& \underset{–}{}\\ \text{Furniture}& 1,300& 1,300\\ \text{Stock}& 34,000& 25,000\end{array}$

During the year Mr. Ashok sold his private car for Rs. 50,000 and invested this amount into the business. He withdrew from the business Rs. 1,500 per month up to July 31, 2005 and thereafter Rs. 4,500 per month as drawings.
You are required to prepare the statement of profit or loss and statement of affairs as on December 31, 2005.

Answer 1

Statement of Affairs

as on 1st January, 2005

$\begin{array}{cccc}\text{Capital and Liabilities}& \text{Amt. (Rs.)}& \text{Assets}& \text{Amt. (Rs.)}\\ \text{Sundry Creditors}& 45,000& \text{Sundry Debtors}& 22,500\\ \text{Loan from wife}& 66,000& \text{Land and Buildings}& 89,600\\ \text{Bank Overdraft}& 25,000& \text{Cash in Hand}& 7,500\\ \text{Capital (Balancing Figure)}& 18,900& \text{Furniture}& 1,300\\ & & \text{Stock}& 34,000\\ & \overline{\underset{–}{\underset{–}{1,54,900}}}& & \overline{\underset{–}{\underset{–}{1,54,900}}}\end{array}$

Statement of Affairs

as on 31st December, 2005

$\begin{array}{cccc}\text{Capital and Liabilities}& \text{Amt. (Rs.)}& \text{Assets}& \text{Amt. (Rs.)}\\ \text{Sundry Creditors}& 93,000& \text{Land and Buildings}& 90,000\\ \text{Loan from wife}& 57,000& \text{Cash in Hand}& 8,700\\ & & \text{Furniture}& 1,300\\ & & \text{Stock}& 25,000\\ & & \text{Capital (Balancing Figure)}& \\ & & \text{(Negative due to loss)}& 25,000\\ & \overline{\underset{–}{\underset{–}{1,50,000}}}& & \overline{\underset{–}{\underset{–}{1,50,000}}}\end{array}$

Statement Showing Profit or Loss for the Year 2005

$\begin{array}{cc}\text{Particulars}& \text{Amt. (Rs.)}\\ \text{Capital at the end of the year as on 31st December, 2005}& (25,000)\\ (+)\text{Drawings during the year}\left[\begin{array}{c}1,500\times 7=10,500\\ 4,500\times 5=22,500\end{array}\right]& 33,000\\ (-)\text{Additional capital introduced}& \overline{8,000}\\ (-)\text{Capital introduced during the year}& \underset{–}{(50,000)}\\ & \text{(42,000)}\\ (-)\text{Capital at the beginning of the year on January 2005}& (18,900)\\ \text{Loss during the year 2005}& \overline{(60,900)}\end{array}$