Question

Mrs. Anu started a firm with a capital Rs. 4,00,000 on 1st July, 2016. She borrowed from her friends a sum Rs. 1,00,000 @ $10\%$ per annum (interest paid) for business and brought a further amount to capital Rs. 75,000 on 31st December, 2016.
Her position was:

$\begin{array}{cc}\text{Items}& \text{Amt. (Rs.)}\\ \text{Cash}& 30,000\\ \text{Stock}& 4,70,000\\ \text{Debtors}& 3,50,000\\ \text{Creditors}& 3,00,000\end{array}$

She withdraw Rs. 8,000 per month for the year. Calculate profit or loss for the year and show your working clearly.

Answer 1

$\text{Statement of Affairs}\text{as at 31st December, 2016}\begin{array}{cccc}\text{Capital and Liabilities}& \text{Amt. (Rs.)}& \text{Assets}& \text{Amt. (Rs.)}\\ \text{Creditors}& 3,00,000& \text{Cash}& 30,000\\ \text{Loan from friends}& 1,00,000& \text{Stock}& 4,70,000\\ \text{Capital(Balancing Figure )}& 4,50,000& \text{Debtors}& 3,50,000\\ & \overline{\underset{–}{\underset{–}{8,50,000}}}& & \overline{\underset{–}{\underset{–}{8,50,000}}}\end{array}$

$\text{Statement Showing Profit or Loss Account}\text{for the year ending 31st December, 2016}\begin{array}{cc}\text{Particulars}& \text{Amt. (Rs.)}\\ \text{Capital at the End of the Year i.e, 31st December , 2016}& 4,50,000\\ \text{(+)Drawings Made During the Year}(8,000\times 6)& 48,000\\ & \overline{4,98,000}\\ \text{(-) Additional Capital Introduced}& (75,000)\\ \text{Adjusted Capital at the End}& \overline{4,23,000}\\ \text{(-) Capital in the Beginning of the Year i.e., 1st July, 2016}& \underset{–}{(4,00,000)}\\ \text{Profit Made During the Year 2016}& \underset{–}{\underset{–}{23,000}}\end{array}$