Question

Question 13.
Following information is supplied to you by a shopkeeper:

During the year, he withdrew ₹ 2,500 per month for dometstic purposes. He also borrowed from a friend at 9% a sum of ₹ 20,000 on 1st October, 2017. He has not yet paid the interest. A provision of 5% on debotrs for doubtful debts is to be made.
Ascertain the profit or loss made by him during the period.

Answer 1

The profit and loss for the year amounts to Rs 35,400

Explanation:

First computing the adjusted capital as:

Adjusted capital = Capital as on March 31,2018 + Drawings

Adjusted capital  = Rs 118,400 + Rs 30,000

= Rs 148,400

Now, computing the Profit and loss for the year as:

Profit and loss for the year = Adjusted capital - Capital as on  April 1 , 2017

Profit and loss for the year = Rs148,400- Rs 113,000

Profit and loss for the year = Rs 35,400

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