Question

Panwar commenced business on 1st January 2016 with a capital of Rs. 10,000, which he paid into a bank account opened for the purpose.
On the same date, he brought furniture which cost Rs. 2,000 and made purchases of goods worth Rs. 6,500.
He kept his books on single entry system.
On 31st December 2016 stock was valued at Rs. 8,300. There were book debts amounting to Rs. 3,400 of which Rs. 200 represented debts which were irrecoverable.
Creditors amounted to Rs. 3,600 and bank passbook showed a balance of Rs. 1,450.
Panwar withdrew three times from business for his private expenses, each time he withdrew Rs. 600 and in addition, he used Rs. 500 worth of goods from his shop.
He took Rs. 1,000 as a loan from his wife during the year.
He gave Rs. 200 to his son from business, which he omitted to enter.

You are required to prepare a statement showing profit or loss in the business for the year ending 31st December 2016 from the above information.

Answer 1

$\text{Statement of Affairs}\text{as at 31st December, 2016}\begin{array}{cccc}\text{Capital and Liabilities}& \text{Amt. (Rs.)}& \text{Assets}& \text{Amt (Rs)}\\ \text{Creditors}& 3,600& \text{Bank}& 1,450\\ \text{Loan from Wife}& 1,000& \text{Stock}& 8,300\\ \text{Capital(Balancing Figure )}& 10,350& \text{Debtors}3,400& \\ & & \text{(-) Bad Debts}\underset{–}{200}& 3,200\\ & & \text{Furniture}& 2,000\\ & \overline{\underset{–}{\underset{–}{14,950}}}& & \overline{\underset{–}{\underset{–}{14,950}}}\end{array}$

$\text{Statement Showing Profit or Loss}\text{for the year ending 31st December, 2016}\begin{array}{ccc}\text{Particulars}& & \text{Amt. (Rs.)}\\ \text{Closing Capital as on 31st December, 2016}& & 10,350\\ \text{(+) Drawings During the Year}& & \\ \text{Drawing in Cash (}Rs.600\times 3)& 1,800& \\ \text{Drawings in Goods}& 500& \\ \text{Drawings in Cash (To Son)}& \underset{–}{200}& \underset{–}{2,500}\\ \text{Adjusted Capital at the End}& & 12,850\\ \text{(-) Opening Capital}& & \underset{–}{10,000}\\ \text{Profit for the Year}& & 2,850\end{array}$