Rs c8 Accounts from incomplete Records 441 If the net result of above computation is a positive amount, it represents the profit earned during the year. In case the net result is a negative amount it would represent the loss sustained during the year. The same computation can be done in the form of an equation as follows: Profit or Loss = Capital at end - Capital at beginning + Drawings during the year - Capital introduced during the year. For example, consider the following information extracted from the records of Ms. Sheetu : Capital at the beginning of year, i.e. April 01.2004 1.20,000 Capital at the end of year. I.e. on March 31.2005 2.00.000 Capital brought in by the proprietor during the year 50,000 Withdrawals by the proprietor during the year 30.000 The profit for the year will be calculated as follows: The profit earned or loss incurred during a given perlod will be computed as follows: Particulars Amount Capital as on March 31, 2005 2.00.000 Add Drawing during the year 30.000 12.30.000 Less Additional capital Introduced during the year 150.0001 Adjusted capital at the end, I.e. March 31, 2005 11.80,000 Less Capital in the beginning. Le April 01.2004 11.20.000) Profit made during the year 60.000 Rs Hlustration 1 Mr. Mehta started his readymade garments business on April 1, 2004 with a capital of Rs. 50.000. He did not maintain his books according to double entry system. During the year he introduced fresh capital of Rs. 15.000. He withdrew Rs. 10,000 for personal use. On March 31, 2005, his assets and liabilities were as follows: Total creditors Rs. 90.000: Total debtors Rs. 1.25,600 : Stock Rs. 24.750 : Cash at bank Rs. 24.980. Calculate profit or loss made by Mr. Mehta during the first year of his business using the statement of affairs method