Question

Q.6 Find the opening capital of the firm from the following information given at the end of the year: Total assets Rs.1,30,000; external liabilities Rs. 40,000. During the year, proprietor introduced capital of Rs. 20,000, withdraw Rs.15,000 for personal use and earned a profit of Rs.25,000.

Answer 1

Opening Capital = Closing capital+Drawings -Additional Capital - Profit.

Closing Capital = Assets - Liabilities
= 130000-40000
= 90000

so, opening capital= 90000+15000-20000-25000
=60000

Answer 2

Opening Capital = Closing capital+Drawings -Additional Capital - Profit.

Closing Capital = Assets - Liabilities
= 130000-40000
= 90000

therefore , opening capital= 90000+15000-20000-25000
                                             =60000