Illustrator
Mr. Mano keeps his books of accounts under single entry system. His financial
position on 31.12.90 and 31.12.91 was as follows:
1990
1991
Rs.
Rs.
Cash
9,860
800
Stock in trade
38,520 57,020
Plant & Machinery
54,420 61,000
Bills Receivable
16,480
Sundry Debtors
24,840 43,940
Sundry Creditors
72,040 80,000
Furniture
4,960 5,220
Drawings
5,000
During the year he introduced additional capital of Rs. 20,000.
From the above particulars prepare a statement of Profit and Loss of
Mr. Mano for the year ended 31.12.91.
Answers
Answer:
Profit or Loss: 52,700 - 12,950 = 39,750 (Profit)
Explanation:
Step 1: Profit in economics is the difference between the income generated by an economic entity's outputs and the sum of its input costs. It is equivalent to total income less total expenses, which includes both direct and indirect expenses.
Step 2: The surplus of income over expenses in a single or series of transactions. in particular: the difference between the selling price of items and their cost. 3. Usually for a specific time period, net income.
Step 3: 1) Furniture is to be depreciated by 10%
2] Provide Interest on Capital at 5% on Opening Capital
3] PBD is to be created at 5% on Debtors
4] Commission Receivable Rs. 1,200
1) Statement of Profit or Loss for the year
2) Redraft the Statement of Affairs as on 31-03-2016.
Income:
-Cash: 20,000 - 8,000 = 12,000
-Bills Receivable: 10,000
-Debtors: 30,000 - 1,500 (PBD) = 28,500
-Commission Receivable: 1,200
Total Income: 52,700
Expenses:
-Stock: 28,000 - 25,000 = 3,000
-Creditors: 16,000 - 15,000 = 1,000
-Bills Payable: 6,000 - 5,000 = 1,000
-Furniture (Depreciation): 12,000 x 10% = 1,200
-Interest on Capital: 5,000 x 5% = 250
-Private withdrawals: 500 x 12 = 6,000
-Household goods used: 1,000
Total Expenses: 12,950
Profit or Loss: 52,700 - 12,950 = 39,750 (Profit)
2)Redrafted Statement of Affairs as on 31-03-2016:
Assets:
-Cash: 20,000
-Bills Receivable: 10,000
-Debtors: 30,000 - 1,500 (PBD) = 28,500
-Commission Receivable: 1,200
-Stock: 28,000
-Furniture: 12,000 - 1,200 (Depreciation) = 10,800
Liabilities:
-Creditors: 16,000
-Bills Payable: 6,000
-Bank Overdraft: 8,000
-Capital: 8,000 + 5,000 + 39,750 (Profit) = 52,750
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