From the following particulars of a trader, ascertain the Net Profit for the year ended 31st March 2025. Statement of Affairs as on 1st April 2024: Cash ₹7,000; Bank ₹11,000; Stock ₹26,000; Debtors ₹21,000; Furniture ₹16,000; Creditors ₹19,000; Bills Payable ₹6,000. Statement of

Question

From the following particulars of a trader, ascertain the Net Profit for the year ended 31st March 2025. Statement of Affairs as on 1st April 2024: Cash ₹7,000; Bank ₹11,000; Stock ₹26,000; Debtors ₹21,000; Furniture ₹16,000; Creditors ₹19,000; Bills Payable ₹6,000. Statement of Affairs as on 31st March 2025: Cash ₹9,500; Bank ₹15,000; Stock ₹32,000; Debtors ₹26,000; Furniture (after depreciation) ₹14,400; Creditors ₹21,000; Bills Payable ₹4,000; Outstanding Rent ₹1,500. During the year the trader introduced additional capital of ₹6,000 and withdrew ₹13,000 (including goods worth ₹2,500 withdrawn for personal use). Additional information: create a Provision for Doubtful Debts at 5% on closing Debtors, and allow Interest on Capital at 6% per annum on the capital at the beginning of the year.

Accepted Answer

Capital at the beginning (1st April 2024):
Assets = 7,000 + 11,000 + 26,000 + 21,000 + 16,000 = ₹81,000.
Liabilities = 19,000 + 6,000 = ₹25,000.
Capital = 81,000 − 25,000 = ₹56,000.

Capital at the end (31st March 2025):
Assets = 9,500 + 15,000 + 32,000 + 26,000 + 14,400 = ₹96,900.
Liabilities = 21,000 + 4,000 + 1,500 = ₹26,500.
Capital = 96,900 − 26,500 = ₹70,400.

Statement of Profit for the year ended 31st March 2025

| Particulars | Amount (₹) |
|---|---|
| Capital at the end of the year | 70,400 |
| Add: Drawings during the year (cash and goods) | 13,000 |
| | 83,400 |
| Less: Additional Capital introduced during the year | (6,000) |
| | 77,400 |
| Less: Capital at the beginning of the year | (56,000) |
| **Profit before further adjustments** | **21,400** |
| Less: Provision for Doubtful Debts (26,000 × 5%) | (1,300) |
| Less: Interest on Capital (56,000 × 6%) | (3,360) |
| **Net Profit for the year** | **16,740** | …

Particulars	Amount
Capital on 01.04.2022	₹ 38,000
Capital on 31.03.2023	₹ 44,000
Drawings during the year	₹ 14,000
Additional Capital introduced during the year	₹ 8,000

Particulars	Amount (₹)
Capital at the end of the year	70,400
Add: Drawings during the year (cash and goods)	13,000
	83,400
Less: Additional Capital introduced during the year	(6,000)
	77,400
Less: Capital at the beginning of the year	(56,000)
Profit before further adjustments	21,400
Less: Provision for Doubtful Debts (26,000 × 5%)	(1,300)
Less: Interest on Capital (56,000 × 6%)	(3,360)
Net Profit for the year	16,740

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