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Its from kaplan sir. 2013
1 may purchase of goods for resale on credit 300
2 may injection long term capital into the business 1400
3 may payment of rent made 750
5 may withdrawal of cash from business 400
7 may sales made on credit 1200
(goods originally cost 600)
at the start of the week the assets of the business were 15700 and liabilities amounted to 11200.
at the end of the week, what is the amount of capital?
sir could you help me with this cause when solving this by accounting equation i am getting 5050 only.
my questions are:
1) when considering profit in the equation what profit do we take? GP or NP?
2) is it possible to solve it by accounting equation? how?1) Always net profit
2) Yes. You can calculate the profit from the items on 3, and 7 May ( it comes to a loss of 150).
Then you can use the accounting equation. The capital at the start = 4,500.
So capital at the end = 4,500 -150 – 400 + 1,400 = $5,350how it is 150? ive got sales(1200) – op.Inv (600) – purchases (300) – expenses (750)= loss of 450…i dont understand…
The sales were 1200, the cost of the sales was 600 – that gives a gross profit of 600.
The rent was 750. That gives a net loss of 150.
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