Answer 1

In the books of Mr. Premnath
Statement of Affairs as on March 31, 2009
Liabilities	Amount (Rs)	Assets	Amount (Rs)
Creditors	20,000	Cash in Hand	12,000
10% Bank Loan	20,000	Cash at Bank	26,000
Capital (Balancing Figure)	66,000	Debtors	20,000
		Stock	24,000
		Furniture	24,000
	1,06,000		1,06,000

 

Statement of Affairs as on March 31, 2010
Liabilities		Amount (Rs)	Assets		Amount (Rs)
Creditors	20,000		Cash in Hand		13,000
Less: wrongly taken (over valuation)	2,000	18,000
10% Bank Loan		20,000	Cash at Bank		30,000
O/s Interest on Loan		2,000	Stock		26,000
Capital (B. Fig.)		75,550	Debtors	26,000
			Less: Bad Debts	1,000
			Less: P.D.D.	1,250	23,750
			Furniture	24,000
			Less: Depreciation @5%	1,200	22,800
		1,15,550			1,15,550

 

Statement of Profit or Loss for the year ended March 31, 2010
Particulars		Amount (Rs)
Capital at the end of the year 31.03.10		75,550
	Add: Drawings made during the year	15,000
	Less: Additional capital introduced during the year (01.01.10)	15,000
Adjusted capital at the end of the year 31.03.10		75,550
	Less: Capital in the beginning of the year 31.03.09	66,000
	Less: Interest on Capital	6,975
Profit for the year		2,575

Working Notes:

WN1 Calculation of Reserve for Doubtful Debts

\[\text{Reserve for Doubtful Debt} = 25,000 \times\frac{5}{100}= Rs 1,250\]

WN2 Calculation of Depreciation

\[\text{Depreciation on Furniture} = 24,000 \times\frac{5}{100}= Rs 1,200\]

WN3 Calculation of Outstanding Interest on Loan

\[\text{Outstanding Interest on Loan} = 20,000 \times\frac{10}{100}= Rs2, 000\]

WN4 Calculation of Interest on Capital

\[\begin{array}{l}\text{Interest on Capital} = 66,000 \times\frac{10}{100}= Rs 6,600 \\ \text{Additional Capital} = 15,000 \times\frac{10}{100}\times\frac{3}{12}= Rs 375 \\ \\ \text{Total Interest on Capital} = 6,600 + 375 = Rs 6,975\end{array}\]

WN5 Calculation of Total Drawings

\[\begin{array}{lr}\text{LIC} & 10,000 \\ \text{Goods Withdrawn} & 5,000 \\ \text{Total Drawings} & 15,000\end{array}\]