Question

 Calculate the Closing Capital and Profit of the year if; 

Capital introduce by businessman Rs. 100,000. He also took the loan from his friend Rs. 50,000. Creditors at the end of the year was Rs. 20,000 and Closing fixed assets Rs, 2,00,000 bank balance Rs. 50,000. Drawings Rs. 2000 additional capital Rs.30000

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Answer 1

Answer:

closing capital=620000

Step-by-step explanation:

In case there is no double entry system is followed, profit can be calculated by comparing the opening and closing capital. In the given situation this can be calculated as:

Opening Capital                                  Rs.200000

Add: Capital Introduced                     Rs.200000

Add: Profit for the year                      Rs. 250000

Less: Loss for the year                       Rs.NIL    

Less: Drawings                                   Rs. 30000

                                                          --------------------

Capital at the end of the year          Rs.620000

                                                          -------------------

Loan taken is a liability and loan given is asset, that will not affect the capital.