OMTEX CLASSES: On 01/04/13, Mr. Bannerjee commenced business with a capital of Rs.25,000. During the year 20013-14, he withdrew for his personal use goods worth Rs.2, 000 and cash Rs.3,000. He also gave a donation of Rs. 500 to Shri Ramakrishna mission. He paid Life Insurance premium of Rs.1000. During the year, he received a gift of Rs.5000 from his father by cheque which was deposited in the bank account of the business. On 31/3/14; his position was as under:

On 01/04/13, Mr. Bannerjee commenced business with a capital of Rs.25,000. During the year 20013-14, he withdrew for his personal use goods worth Rs.2, 000 and cash Rs.3,000. He also gave a donation of Rs. 500 to Shri Ramakrishna mission. He paid Life Insurance premium of Rs.1000. During the year, he received a gift of Rs.5000 from his father by cheque which was deposited in the bank account of the business. On 31/3/14; his position was as under:

On 01/04/13, Mr. Bannerjee commenced business with a capital of Rs.25,000.
During the year 20013-14, he withdrew for his personal use goods worth Rs.2, 000 and cash Rs.3,000. He also gave a donation of Rs. 500 to Shri Ramakrishna mission. He paid Life Insurance premium of Rs.1000. During the year, he received a gift of Rs.5000 from his father by cheque which was deposited in the bank account of the business. On 31/3/14; his position was as under:

Particulars
Rs.
Machinery
20000
Furniture
2000
Stock
5000
Debtors
8000
Balance at bank
1500
Prepaid insurance
200
Payable to creditors
3000
Liabilities for expenses
700

Find out the profit earned by him after providing for depreciation at 10% on plant & Machinery and furniture and Rs.400 as reserve for Doubtful Debt. Also prepare statement of affair as on 31.03.014.

Solution: In the books of Mr. Bannerjee

Statement of Affairs as on 31.03.2014

Liability
31.3.2014
Assets
31.03.2014
Capital
[Bal. Fig.]
33000
Machinery
20000


Furniture
2000
Payable to
Creditors
3000
Stock
5000
Liabilities for
expenses
700
Debtors
8000


Balance at
Bank
1500


Prepaid Indurance
200

36700

36700

Statement of Profit or Loss for the year ended 31.03.2014

Particulars
Rs.
Rs.
Capital at the end of the year

33000
Add: Drawings:


Personal use [Goods]
2000

Personal use [Cash]
3000

Donation to Shri Ramakrishna Mission
500

Premium for Life Insurance
1000
6500


39500
Less: Additional Capital Introduced


Gift Received from Father Used for Business

-5000


34500
Less: Capital at the beginning of the year

25000
Trading Profit

9500
Less: Depreciation:


On Plant and Machinery
20000 × 10% = 2000
-2000

On Furniture
2000× 10%
-200
-2200


7300
Less: R.D.D.

-400
Net Profit

6900


25000
33000
9500
6900
OPENING CAPITAL
CLOSING CAPITAL
TRADING PROFIT
NET PROFIT