Ayush started business on 1st april, 2016 with a capital of 1,00,000. On 31st march , 2017 , his assets were 3,00,000 and external liabilities 60,000. During the year he had introduced additional capital of 50,000 and had withdraw 25,000 for personal use. Find out his capital as on 31st march , 2017 and profit and loss for the year.
Answers
Explanation:
As Ayush started a business on 1st April 2016 with a capital of 100k That capital will be the opening capital.
On 31st March 2017 is the end of a financial year his assets were 300k which is the closing assets because the next day will be a new year. And the external liabilities is 60k which is the closing liability because they have not mentioned anywhere that Ayush has paid all his liability or debts. The additional capital and drawings are given.
Now to finding the capital on 31st March 2017 which is the end of the financial year we have to find the closing capital. We know that Capital = Assets - Liabilities.
Let Closing Capital be x
Closing capital = closing assets - closing Liabilities.
which is 300k - 60k
giving us the capital at the end of the year as 240k.
The next step is finding the profit
Profit = Closing Capital - Opening capital - Additional capital + Drawings.
which is 240k - 100k - 60k + 25k
Giving us the end profit as 115k