Vikas is keeping his accounts according to Single Entry System. His capital on 31st December, 2015 was ₹ 2,50,000 and his capital on 31st December, 2016 was ₹ 4,25,000. He further informs you that during the year he gave a loan of ₹ 30,000 to his brother on private account and withdrew ₹ 1,000 per month for personal purposes. He used a flat for his personal purpose, the rent of which @ ₹ 1,800 per month and electricity charges at an average of 10% of rent per month were paid from the business account. During the year he sold his 7% Government Bonds of ₹ 50,000 at 1% premium and brought that money into the business.
Prepare a Statement of Profit or Loss for the year ended 31st December, 2016.

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Solution

Statement of Profit/Loss

Particulars

Amount

(₹)

Closing Capital
4,25,000

Less: Opening Capital
(2,50,000)

Less: Additional Capital
(50,500)

Add: Drawings
65,760

Profit for the Year
1,90,260

Note: Drawings include loan to brother, withdrawals in cash, rent and electricity charges.

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	1st April, 2016	31st March, 2017
	₹	₹
Cash Balance	3,500	4,100
Bank Balance	Dr. 6,000	Cr. 15,000
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He withdrew from the business ₹ 1,500 per month for his personal use and ₹ 8,000 for giving a personal loan to his brother. He also used a house for his personal purposes, the rent of which at the rate of ₹ 900 per month and electricity charges at an average rate of ₹ 250 per month were paid from the business account.
He had received a lottery prize of ₹ 25,000, out of which he invested half the amount in business.
He has not paid two months' salary to his clerk @ ₹ 1,200 per month, but insurance premium @ ₹ 600 per annum was paid on 1st October, 2016 to run for one year.
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Q. The Capital of Sh. Madhusudan on 1st April, 2016 was ₹ 5,00,000 and on 31st March, 2017 was ₹ 4,80,000. He has informed you that he withdrew from the business ₹ 8,000 per month for his private use. He paid ₹ 20,000 for his income-tax and the installment of the loan of his personal house at the rate of ₹ 15,000 per month from the business. He had also sold his shares of Reliance Company costing ₹ 1,00,000 at a profit of 20% and invested half of this amount in the business. Calculate the profit or loss of the business.

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.

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Statement of Profit/Loss
Particulars	Amount (₹)
Closing Capital	4,25,000
Less: Opening Capital	(2,50,000)
Less: Additional Capital	(50,500)
Add: Drawings	65,760
Profit for the Year	1,90,260

Statement of Profit/Loss Particulars Amount (₹) Closing Capital 4,25,000 Less: Opening Capital (2,50,000) Less: Additional Capital (50,500) Add: Drawings 65,760 Profit for the Year 1,90,260 Note: Drawings include loan to brother, withdrawals in cash, rent and electricity charges.

Statement of Profit/Loss

Particulars

Amount

(₹)

Closing Capital
4,25,000

Less: Opening Capital
(2,50,000)

Less: Additional Capital
(50,500)

Add: Drawings
65,760

Profit for the Year
1,90,260

Note: Drawings include loan to brother, withdrawals in cash, rent and electricity charges.