A person has small proprietorship business. He has following details:-
Capital............20000
Profit...............60000
Total...............80000
Cash.............30000
Current A/c...25000
Bank..............25000
Total.............80000
The current account is nothing but the amount withdrawn for personal use. This account is to be adjusted against capital after transferring profit to capital on 31st march as follows:-
Profilt and loss Dr...............60000
To capital.................................................60000
Capital A/c Dr...........................25000
To Current account.....................................25000
Closing capital=20000+60000-25000=55000
My query is:-
In Balance sheet part how much capital is to be shown Rs.20000 or Rs.55000??
Profit of Rs.60000 to be shown in reserves and surplus or to be shown after adjusting into capital?
CAclubindia
