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A started business on Jan 1 with a capital of Rs. 40,000. On 31st Dec his position was creditors Rs. 4,700, machinery Rs. 40,000, furniture Rs. 2,000, debtors Rs. 1,300, cash Rs. 15,000. He made drawings @RS. 200 per month and Rs. 1,000 which he brought on 1st Oct. in the business as further capital. Business profit will be
(a) Rs. 15,000
(b) Rs. 16,000
(c) Rs. 14,000
(d) Rs. 17,000?
Most Upvoted Answer
A started business on Jan 1 with a capital of Rs. 40,000. On 31st Dec ...
Understanding the Situation
A started a business with an initial capital of Rs. 40,000. Throughout the year, A made drawings and also introduced additional capital.
Balance Sheet Overview on Dec 31
- Creditors: Rs. 4,700
- Machinery: Rs. 40,000
- Furniture: Rs. 2,000
- Debtors: Rs. 1,300
- Cash: Rs. 15,000
Total Assets Calculation
To calculate total assets, sum up the values of machinery, furniture, debtors, and cash:
- Machinery: Rs. 40,000
- Furniture: Rs. 2,000
- Debtors: Rs. 1,300
- Cash: Rs. 15,000
Total Assets = Rs. 40,000 + Rs. 2,000 + Rs. 1,300 + Rs. 15,000 = Rs. 58,300
Total Liabilities Calculation
The only liability mentioned is the creditors:
- Creditors: Rs. 4,700
Total Liabilities = Rs. 4,700
Owner's Equity Calculation
Owner's equity can be calculated as:
- Owner’s Equity = Total Assets - Total Liabilities
- Owner’s Equity = Rs. 58,300 - Rs. 4,700 = Rs. 53,600
Drawings and Additional Capital
A made monthly drawings of Rs. 200 for 12 months:
- Total Drawings = Rs. 200 * 12 = Rs. 2,400
Additionally, A introduced Rs. 1,000 in October.
Net Capital Calculation
- Net Capital = Initial Capital + Additional Capital - Total Drawings
- Net Capital = Rs. 40,000 + Rs. 1,000 - Rs. 2,400 = Rs. 38,600
Profit Calculation
To find the profit:
- Profit = Owner’s Equity - Net Capital
- Profit = Rs. 53,600 - Rs. 38,600 = Rs. 15,000
Conclusion
The business profit for the year is Rs. 15,000. Thus, the correct answer is (a) Rs. 15,000.
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A started business on Jan 1 with a capital of Rs. 40,000. On 31st Dec his position was creditors Rs. 4,700, machinery Rs. 40,000, furniture Rs. 2,000, debtors Rs. 1,300, cash Rs. 15,000. He made drawings @RS. 200 per month and Rs. 1,000 which he brought on 1st Oct. in the business as further capital. Business profit will be(a) Rs. 15,000(b) Rs. 16,000(c) Rs. 14,000(d) Rs. 17,000?
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A started business on Jan 1 with a capital of Rs. 40,000. On 31st Dec his position was creditors Rs. 4,700, machinery Rs. 40,000, furniture Rs. 2,000, debtors Rs. 1,300, cash Rs. 15,000. He made drawings @RS. 200 per month and Rs. 1,000 which he brought on 1st Oct. in the business as further capital. Business profit will be(a) Rs. 15,000(b) Rs. 16,000(c) Rs. 14,000(d) Rs. 17,000? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A started business on Jan 1 with a capital of Rs. 40,000. On 31st Dec his position was creditors Rs. 4,700, machinery Rs. 40,000, furniture Rs. 2,000, debtors Rs. 1,300, cash Rs. 15,000. He made drawings @RS. 200 per month and Rs. 1,000 which he brought on 1st Oct. in the business as further capital. Business profit will be(a) Rs. 15,000(b) Rs. 16,000(c) Rs. 14,000(d) Rs. 17,000? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A started business on Jan 1 with a capital of Rs. 40,000. On 31st Dec his position was creditors Rs. 4,700, machinery Rs. 40,000, furniture Rs. 2,000, debtors Rs. 1,300, cash Rs. 15,000. He made drawings @RS. 200 per month and Rs. 1,000 which he brought on 1st Oct. in the business as further capital. Business profit will be(a) Rs. 15,000(b) Rs. 16,000(c) Rs. 14,000(d) Rs. 17,000?.
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