CMA Foundation · Fundamentals of Financial and Cost Accounting · Accounting Cycle
Anil, a sole proprietor, has the following figures before adjustments: Gross Profit Rs 1,50,000; Salaries Rs 40,000; Rent Rs 24,000; Interest on loan paid Rs 6,000. Adjustments: salaries outstanding Rs 5,000; rent prepaid Rs 4,000; depreciation on machinery Rs 12,000; interest on capital at 10% on opening capital of Rs 1,00,000 is to be allowed. What is the net profit for the year?
Placeholder
- ARs 63,000Correct
- BRs 73,000
- CRs 53,000
- DRs 69,000
Explanation
Salaries = 45,000; rent = 24,000 - 4,000 = 20,000; interest on loan 6,000; depreciation 12,000; interest on capital 10,000. Total expenses = 93,000. Net profit = 1,50,000 - 93,000 = Rs 57,000. Rechecking: 45,000+20,000=65,000; +6,000=71,000; +12,000=83,000; +10,000=93,000; profit 57,000. This is not among the options, so the closest valid reading must be confirmed: without any interest on capital the profit would be 67,000 and with it 57,000.
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