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Question

Mr. Joshi started a business with a capital of ₹ 5,00,000. At the end of the year his position was:
(₹)
Cash in hand 15,000
Cash at bank 70,000
Sundry Debtors 1,20,000
Stock 2,40,000
Furniture 75,000
Machinery 2,00,000

Sundry creditors at this date totalled ₹ 80,000. During the year he introduced a further capital of ₹ 1,50,000 and withdrew for household expenses ₹ 90,000.
You are required to calculate profit or loss during the year.

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Solution

Statement of Affairs
as on March …
Liabilities Amount (Rs) Assets Amount (Rs)
Sundry Creditors 80,000 Cash in Hand 15,000
Capital (Balancing Figure) 6,40,000 Cash at Bank 70,000
Sundry Debtors 1,20,000
Stock 2,40,000
Furniture 75,000
Machinery 2,00,000
7,20,000 7,20,000

Statement of Profit or Loss
for the year ended ….
Particulars Amount
(Rs)
Capital at the end of the year 6,40,000
Add: Drawings made during the year 90,000
Less: Additional capital introduced during the year 1,50,000
Adjusted capital at the end of the year 5,80,000
Less: Capital in the beginning of the year 5,00,000
Profit made during the year 80,000

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