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Dear Mr. John ,
Please advice to clear the confusion :
ASSET-LIABILITIES -OPEN
ING CAP + DRAWING =PROFIT
Therefore : PROFIT =ASSET- LIABILITIES -OPENING CAP+DRAWINGPROBLEMS : PROFIT=35400$
CAPITAL=10200$
DRAWING=500*12=6000$
NET ASSET=95100$
OPENING CAP =?Regards,
VictorI do not know why you have headed up this post as ‘double entry’ because it has nothing to do with double entry 🙂
I assume you have watched my free lectures on this and therefore know that the accounting equation is:
Increase in net assets (capital) = profit + capital introduced – drawingsI assume that the $10,200 that you have typed as being capital is actually new capital introduced (if not then the question makes no sense at all).
Therefore:
95,100 – opening capital = 35,400 + 10,200 – 6,000 = 39,600
So opening capital = 95,100 – 39,600 = $55,500
It would seem that maybe you have not watched my lectures, in which case do. They are. complete free course for Paper FA and cover everything needed to be able to pass the exam well 🙂
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