Double entry bookkeping — OpenTuition Forums

CChin10y ago

Hi Sir, The profit made by a business in 20x7 was $35400.The proprietor inject new capital of $10200 during the year and withdrew a monthly salary of $500 If net assest at the end of 20x7 were $95100 ,what was the propritor capital at the beginning of the year? A.$50000 B.$55500 C.$63900 D.$134700 Y the answer is B and not A?

John MoffatTutor10y ago#1

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 = 55500

CChin10y ago#2

Hi Sir, how to get $6000 for drawing?? 12x 500 = $6000 ?? Am I rite?

John MoffatTutor10y ago#3

Yes - there are 12 months in a year and so 500 a month is 6000 in a year

CChin10y ago#4

Ok... thank you.....

John MoffatTutor10y ago#5

You are welcome :-)