Question

Question 21.
A commenced his cloth business on 1st April, 2017 with a capital of ₹ 30,000. On 31st March 2018, his assets were worth ₹ 50,000 and liabilities of ₹ 10,000. Find out his closing capital and profits earned during the year.

Answer 1

Answer:

A commenced his cloth business on 1st April, 2017 with a capital of Rs. 30,000. On 31st March 2018, his assets were worth Rs. 50,000 and liabilities of Rs. 10,000. Find out his closing capital and profits earned during the year.

Answer 2

During the year his closing capital is ₹ 40,000 and his profits earned is ₹ 10,000.

Explanation:

Given:

A commenced his cloth business on 1st April, 2017 with a capital of ₹ 30,000. On 31st March 2018, his assets were worth ₹ 50,000 and liabilities of ₹ 10,000.

Now, to find out his closing capital and profits earned during the year.

On 31st March 2018,

Assets = ₹ 50,000.

Liabilities = ₹ 10,000.

Opening Capital = ₹ 30,000.

So, to get the Closing capital we put formula:

Closing Capital = Assets - Liabilities.

$Closing\ Capital=50000-10000\\\\Closing\ Capital=40000.$

Thus, Closing Capital is ₹ 40,000.

Now, to get the profits earned by putting formula:

Profit = Closing Capital - Opening Capital.

$Profit=40000-30000$

$Profit=10000.$

Hence, profit earned is ₹ 10,000.

Therefore, during the year his closing capital is ₹ 40,000 and his profits earned is ₹ 10,000.