Mohan commenced business on 1st April, 2019 with a capital of ₹ 50,000. On 1st January, 2020, he introduced ₹ 25,000 into business of which ₹ 10,000 was borrowed from Ram

Mohan commenced business on 1st April, 2019 with a capital of ₹ 50,000. On 1st January, 2020, he introduced ₹ 25,000 into business of which ₹ 10,000 was borrowed from Ram. His position on 31st March, 2020 was as under:

Assets: Cash in hand ₹ 4,000; Bank (Cr.) ₹ 6,500; Debtors ₹ 24,000; B/R ₹ 18,600. Stock ₹ 25,400; Furniture ₹ 15,000; Prepaid expenses ₹ 1,000.

Liabilities: Creditors ₹ 13,500; B/P ₹ 4,800; Ram’s Loan ₹ 10,000; Outstanding expenses ₹ 700.

Actual drawings were not known but his living expenses are ₹ 1,000 p.m. Depreciate furniture by 10%. Interest on loan is due @ 12% p.a.

Ascertain his profit or loss for the year 2019-20 & prepare final statement of affairs.

[Ans. Closing Capital ₹ 52,500; Net Loss ₹ 2,300; Total of Final Statement of Affairs ₹ 86,500.]