CA Foundation · Accounting · Final Accounts of Sole Proprietors
Sharma Traders has the following balances at 31 March: Capital (opening) Rs 6,00,000, Drawings Rs 70,000, Net profit for the year Rs 1,90,000, Creditors Rs 80,000, Outstanding rent Rs 10,000. What is the total of the balance sheet (total liabilities including capital)?
The balance sheet total is Rs 8,10,000. Closing capital is opening capital plus profit minus drawings, which is Rs 7,20,000. Adding creditors of Rs 80,000 and outstanding rent of Rs 10,000 gives the total. Adding drawings instead of subtracting them would wrongly give Rs 8,80,000.
- ARs 8,10,000Correct
- BRs 8,80,000
- CRs 8,00,000
- DRs 7,30,000
Explanation
Closing capital = 6,00,000 + 1,90,000 - 70,000 = 7,20,000. Add creditors 80,000 and outstanding rent 10,000: 7,20,000 + 90,000 = 8,10,000. Rs 8,80,000 results from adding drawings instead of deducting them.
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