Question

Following is the position statement of Rakesh who maintains his accounts in incomplete system as on 31^st March, 2022 and 31^st March, 2023:

\(Particulars\)	31st March, 2022 (Rs.)	31st March, 2023 (Rs.)
Machinery	16,000	16,000
Furniture	4,000	4,000
Stock	14,000	10,000
Sundry Debtors	8,000	9,000
Bank	400	3,600
Sundry Creditors	10,000	7,000

Additional Information:
- Fresh Capital introduced = Rs. 600. - Drawings = Rs. 4,100.

Hint:

When using the incomplete records system, always calculate capital as Assets minus Liabilities to determine profit or loss.

Answer 1

To calculate the profit, we use the formula:

\[ \text{Profit} = \text{Closing Capital} - \text{Opening Capital} - \text{Fresh Capital Introduced} + \text{Drawings} \]

Step 1: Calculate Capital at the beginning and end of the year.

Opening Capital (as on 31^st March, 2022):

\[ \text{Assets – Liabilities} = (16,000 + 4,000 + 14,000 + 8,000 + 400) - 10,000 = 32,400 \]

Closing Capital (as on 31^st March, 2023):

\[ \text{Assets – Liabilities} = (16,000 + 4,000 + 10,000 + 9,000 + 3,600) - 7,000 = 35,600 \]

Step 2: Apply the formula.

\[ \text{Profit} = \text{Closing Capital} - \text{Opening Capital} - \text{Fresh Capital Introduced} + \text{Drawings} \]

\[ \text{Profit} = 35,600 - 32,400 - 600 + 4,100 \]

\[ \text{Profit} = Rs. 6,700 \]

Conclusion: The profit for the year ending 31^st March, 2023 is Rs. 6,700.