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Amy is a sole trader and has assets of $569,400 and liabilities of $412,840 on 1 January 20X8. During the year ended 31 December 20X8 she paid $65,000 capital into business and she paid herself wages of $800 per month.
At 31 December 20X8, Amy has assets of $614,000 and liabilities of $369,770.
What is Amy’s profit for the year ended 31 December 20X8?Again, Shafiq – please do not simply copy out questions and expect me to answer them.
You must say what your problem is and then I will try and help you!
Have you watched my free lectures on here? If so then you will have learned the accounting equation.
Increase in net assets = capital introduced + profit – drawingsThe net assets at the start of the year were 569400 – 412840.
The net assets at the end of the year are 614,000 – 369,770The increase over the year you can now calculate.
The capital introduced is 65,000.
The drawings during the year are 12 x 800 = 9600Now you can put these figures into the equation and the profit is the missing figure.
(If you have not watched the lecture (on Chapter 2 of our free Course Notes) then you really must watch it.)
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