To calculate the profit or loss earned during the year, we need to consider the initial investment, any additional capital introduced or withdrawn, as well as the change in the value of assets and liabilities. Here's how we can calculate the profit or loss:
Initial Investment:
- Cash: Rs. 80,000
- Machine: Rs. 90,000
Total Initial Investment: Rs. 80,000 + Rs. 90,000 = Rs. 1,70,000
Additional Capital Introduced:
- Loan Taken: Rs. 1,00,000
Additional Capital: Rs. 1,00,000
Change in Assets:
- Value of Machine on 31st March 2024: Rs. 88,000
Change in Asset Value: Rs. 88,000 - Rs. 90,000 = -Rs. 2,000 (Loss)
Change in Liabilities:
- Repaid 1/10th of the Loan Amount on 1st January 2024: Rs. 1,00,000/10 = Rs. 10,000
Profit/Loss:
Total Assets: Rs. 80,000 (Cash on 31st March 2024) + Rs. 88,000 (Value of Machine) = Rs. 1,68,000
Total Liabilities: Rs. 1,00,000 (Loan Amount) - Rs. 10,000 (Repayment) = Rs. 90,000
Profit/Loss: Total Assets - Total Liabilities
Profit/Loss: Rs. 1,68,000 - Rs. 90,000 = Rs. 78,000
Therefore, the profit earned during the year is Rs. 78,000.