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Hi John, I just saw this question and couldn’t do it without looking the answer. Is there another logical way of working through this type of question? Does the 5600 (wages for the year) and 400 count as a drawing? I just don’t get how the answer works. Please help me!!!!
A sole trader’s business made a profit of $32,500 during the year ended 31 March 20X8. This figure was after deducting $100 per week wages for himself. In addition, he put his home telephone bill through the business books, amounting to $400 plus sales tax at 17.5%. He is registered for sales tax and therefore has charged only the net amount to his statement of profit or loss and other comprehensive income.
His capital at 1 April 20X7 was $6,500. What was his capital at 31 March 20X8?
Ans:
Capital 1 April 6500
Add profit 32500
Less sales tax (70)
Capital 31 Mach 38930You should watch the lectures 🙂
Anything that the owner takes out is drawings – it doesn’t matter what he/she calls it, it is always drawings.
Otherwise it is the accounting equation:
Increase in net assets = increase in capital = profit + capital introduced – drawings
Hi John,
I did watch all the lectures! As opentuiton says, I watched all the lectures and did the exercise from bpp revision kit (not all but most of them). Did my exam today and pass with 72%. Whew! Thank you so much for all your help! Don’t know how I would do it without opentuiton!!!!
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