Question 5.
Mohan maintains books on Single Entry System. He gives you the following information:
Capital on 1st April, 2017 – ₹ 15,200
Capital on 31st March, 2018 – ₹ 16,900
Drawings made during the year – 4,800
Capital introduced on 1st August, 2017 – 2,000
You are required to calculat the Profit or Loss made by Mohan.
Answers
The profit during the year made by Mohan is Rs 4,500
Explanation:
The profit or Loss during the year made by Mohan is computed as:
Computing the adjusted capital as on March 31, 2018 as:
Adjusted capital as on March 31, 2018 = Capital as on March 31, 2018 + Drawings - Additional or extra capital introduced
where
Capital as on March 31, 2018 is Rs 16,900
Drawings amounts to Rs 4,800
Additional or extra capital introduced is Rs 2,000
Putting the values above:
Adjusted capital as on March 31, 2018 = Rs 16,900 + Rs 4,800 - Rs 2,000
Adjusted capital as on March 31, 2018 = Rs 21,700 - Rs 2,000
Adjusted capital as on March 31, 2018 = Rs 19,700
Now, computing the Profit or loss made during the year by Mohan as:
Profit or loss = Adjusted capital as on March 31, 2018 - Capital as on April 1, 2017
Profit or loss = Rs 19,700 - Rs 15,200
Profit or loss = Rs 4,500
Therefore, there is a profit of Rs 4,500 made by Mohan
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