Question

Question 7.
Krishan started his business on 1st April, 2017 with a Capital of ₹ 1,00,000. On 31st March, 2018, his assets were :
Cash – ₹ 3,200
Stock – ₹ 34,800
Debtors – ₹ 31,000
Plant – ₹ 85,000
He owed ₹ 12,000 to sundry creditors and ₹ 10,000 to his brother on that date. He withdrew ₹ 2,000 per month for the private expenses. Ascertain his profit.

Answer 1

The profit amounts to Rs 56,000

Explanation:

• First we will compute capital amount through the statement of affairs as:

Statement of Affairs

Liabilities

Creditors                                 Rs 12,000

Brother's Loan                        Rs 10,000

Capital (Balancing amount)   Rs 132,000

Total                                         Rs 154,000

Assets

Cash                                       Rs 3,200

Debtors                                  Rs 31,000

Plant                                       Rs 85,000

Stock                                      Rs 34,800

Total                                         Rs 154,000

• Computing the Profit and Loss for the year ended on 31, March , 2018

Capital on March.31. 2018               Rs 132,000

(+) Drawings                                      Rs 24,000

(-) Capital on April,1 , 2018                Rs 100,000

Profit made during the period            Rs 56,000