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Hello sir,
On the exam kit from Kaplan, I do not understand the answer from below question:
1 May Purchase of goods for resale $300
2 May Owner injects long term capital $1400
3 May Payment of rent made $750
5 May Owner withdraws cash $400
7 May goods costing $600 sold on credit $1200Asset at the start of the week: $15700 and liabilities $11200
Calculate capital at the end of the week.Ans. as per book = $5350
When I used the formula I got
15700-11200+1400-400+600=6100I can see they have also included rent payment into capital which I think is wrong. Could you please explain
Thanks
TejalThey are not wrong 🙂
The change in net assets = capital introduced + profit – drawings
The capital introduced = 1,400.
The drawings = 400
The profit = 1200 – 600 – 750 = (150)Therefore the capital increases by 1400 – 150 – 400 = 850
The capital at the start of the year = 15700-11200 = 4,500
Therefore the capital at the end of the year = 4,500 + 850 = 5,350.
Have you watched my free lectures on this? The lectures are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well.
Oh yes forgot about that. Thank you very much. I’ve seen all your lecture. In fact I’m self srudying with your help on open tuition and the exam kit. I’ve got my exam booked for Monday. Fingers crossed?
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