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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 comprehensive income.
His capital at 1 April 20X7 was $6,500. What was his capital at 31 March 20X8?
A $33,730
B $33,800
C $38,930
D $39,000Hi,
I think the closing cap = begin + Profit +Cap Intro – withdraw
= 6,500+32,500- 400*0.175( you can’t collect telebill tax from GOVT.)
=38,930 Therefore, it’s C.Hi.
yes the answer is C.
thanks a lot.
I can’t understand this 400*0.175. but know it’s clear.
I’m learning with kaplan and there is almost nothing about non collectable taxsYes, the true answer is C.
@joseph89 said:
I can’t understand this 400*0.175. but know it’s clear.
I’m learning with kaplan and there is almost nothing about non collectable taxsin this question, the business paid the telephone bill of the sole trader’s personal use included of its sales tax. in addition, the paid telephone bill is not the business’ activity’s bill therefor the tax authority will not account this sales tax as the business’ tax credit. so, this paid tax should be classified as a withdrawal :
adjusted profit= 32,500 + sole trader’s wage + personal telephone bill = 32,500 + 100 + 400
adjusted profit = 33,000opening capital – withdrawals + profit = closing capital = 6,500 – 100 – 470 + 33,000
=>
closing capital = 38,930good luck
Hi,
I agree with your closing capital figure.
But the adjusted profit = 35,500+ 100*52 ( 100 is weekly wages, I assume 1 year =52weeks)+400=38,100.I hava a question on building dep. should I ask you here or ….
Thanks,
@sue888 said:
I agree with your closing capital figure.
But the adjusted profit = 35,500+ 100*52 ( 100 is weekly wages, I assume 1 year =52weeks)+400=38,100.Of course you are right.
@sue888 said:
I hava a question on building dep. should I ask you here or ….It’s better to creat a separate topic for your different issue.
good luck
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