Q.From the following particulars of a trader, ascertain the Net Profit for the year ended 31 March 2025. Statement of Affairs as on 1 April 2024: Cash ₹6,000; Bank ₹10,000; Stock ₹24,000; Debtors ₹20,000; Furniture ₹15,000; Creditors ₹18,000; Bills Payable ₹5,000. Statement of Affairs as on 31 March 2025: Cash ₹8,000; Bank ₹14,000; Stock ₹30,000; Debtors ₹25,000; Furniture (after depreciation) ₹13,500; Creditors ₹20,000; Bills Payable ₹3,000; Outstanding Salary ₹1,000. During the year the trader introduced additional capital of ₹5,000 and withdrew ₹12,000 (including goods worth ₹2,000 withdrawn for personal use). Additional information: create a provision for doubtful debts at 4% on closing Debtors, and allow interest on capital at 5% per annum on the capital at the beginning of the year.

Find capital at both dates, compute profit before adjustments, then deduct the provision for doubtful debts and interest on capital.

Provision for doubtful debts = 25,000 × 4% = 1,000. Interest on capital = 52,000 × 5% = 2,600. Net Profit = 21,500 − 1,000 − 2,600 = 17,900.

Capital at the beginning (1 April 2024):

Assets = 6,000 + 10,000 + 24,000 + 20,000 + 15,000 = ₹75,000.

Liabilities = 18,000 + 5,000 = ₹23,000.

Capital = 75,000 − 23,000 = ₹52,000.

Capital at the end (31 March 2025):

Assets = 8,000 + 14,000 + 30,000 + 25,000 + 13,500 = ₹90,500.

Liabilities = 20,000 + 3,000 + 1,000 = ₹24,000.

Capital = 90,500 − 24,000 = ₹66,500.

Statement of Profit or Loss for the year ended 31 March 2025

The closing Furniture figure of ₹13,500 is already given AFTER depreciation, so no separate depreciation adjustment is needed for furniture — it is already correctly reflected in the closing Statement of Affairs and hence in the closing capital used above. Only the two items specifically flagged as "additional information" — the provision for doubtful debts and interest on capital — need to be adjusted separately, since neither was already built into the closing figures.

A common slip is charging depreciation on furniture a second time, not noticing the closing figure (₹13,500) is already stated "after depreciation" — always read whether a given closing asset value already reflects an adjustment before applying it again.