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Hi Sir,
The profit made by a business in 20×7 was $35400.The proprietor inject new capital of $10200 during the year and withdrew a monthly salary of $500If net assest at the end of 20×7 were $95100 ,what was the propritor capital at the beginning of the year?
A.$50000
B.$55500
C.$63900
D.$134700Y the answer is B and not A?
Using the accounting equation:
Closing net assets – opening net assets = profit + capital introduced – drawings
Therefore, 95100 – opening net assets = 35400 + 10200 – 6000 = 39600
So opening net assets (which equals opening capital) = 95100 – 39600 = 55500Yes – there are 12 months in a year and so 500 a month is 6000 in a year
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