Question
What is average profit method?
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Also pass necessary journal entries by assuming partners’ capitals are fluctuating.
| Particulars | 1.1.2018 ₹ | 31.12.2018 ₹ |
| Cash at bank | 80,000 | 90,000 |
| Stock of goods | 1,80,000 | 1,40,000 |
| Debtors | 90,000 | 2,00,000 |
| Sundry creditors | 1,30,000 | 1,95,000 |
| Bank Loan | 60,000 | 60,000 |
| Bills payable | 80,000 | 45,000 |
| Plant and machinery | 1,70,000 | 1,70,000 |
During the year he introduced further capital of ₹ 50,000 and withdrew ₹ 2,500 per month from the business for his personal use. Prepare the statement of profit or loss with the above information.
| Particulars | ₹ | Particulars | ₹ |
| Bank overdraft | $50,000$ | Stock-in-trade | $1,60,000$ |
| Debtors | $1,80,000$ | Creditors | $90,000$ |
| Bills receivable | $70,000$ | Bills payable | $2,40,000$ |
| Computer | $30,000$ | Cash in hand | $60,000$ |
| Machinery | $3,00,000$ |
| Particulars | Maria Ltd ₹ | Kala Ltd ₹ |
| Revenue from operations | 1,00,000 | 2,00,000 |
| Other income | 10,000 | 30,000 |
| Expenses | 70,000 | 1,20,000 |
| Particulars | ₹ |
| Subscription received during 2013-14 | 50,000 |
| Subscription outstanding on 31.3.13 | 20,000 |
| Subscription outstanding for 13-14 | 6,000 |
| Subscription received in Advance on 31.03.13 | 8,000 |
| Subscription received in Advance on 31.03.14 | 9,000 |
| Dr. | Receipts and Payments Account for the year ended $31^{st}$ March, $2019$ | Cr. | ||
| Receipts | $₹$ | $₹$ | Payments | $₹$ |
| To Subscription | ||||
| $2017 - 2018$ | $10,000$ | |||
| $2018 - 2019$ | $50,000$ | |||
| $2019 - 2020$ | $5,000$ | $65,000$ | ||