Question

Mrs. Anu started firm with a capital Rs. 4,00,000 on 1st July, 2011. She borrowed from her friends a sum of Rs. 1,00,000 at 10% per annum (interest paid) for business and brought a further amount to capital of Rs. 75,000 on Dec 31, 2011. Her position was

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

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

Answer 1

Statement of Affairs

as on 31st December, 2011

$\begin{array}{cccc}\text{Liabilities}& \text{Amt. (Rs.)}& \text{Assets}& \text{Amt. (Rs.)}\\ \text{Creditors}& 3,00,000& \text{Cash}& 30,000\\ \text{Loan from friends}& 1,00,000& \text{Stock}& 4,70,000\\ \text{Capital (b/f)}& 4,50,000& \text{Debtors}& 3,50,000\\ & \underset{–}{\underset{–}{\overline{8,50,000}}}& & \underset{–}{\underset{–}{\overline{8,50,000}}}\end{array}$

Statement of Profit or Loss Account

as on 31st December, 2011

$\begin{array}{cc}\text{Particulars}& \text{Amt. (Rs.)}\\ \text{Capital at the end of the year i.e., 31st December, 2011}& 4,50,000\\ (-)\text{Drawings made during the year}(8,000\times 6months)& \underset{–}{48,000}\\ & 4,98,000\\ (-)\text{Additional capital introduced}& \underset{–}{(75,000)}\\ & 4,23,000\\ (-)\text{Capital at the Beginning of the year i.e., January 2011}& \underset{–}{(4,00,000)}\\ \text{Profit of the Current year 2011}& \underset{–}{\underset{–}{23,000}}\end{array}$