Question

When capital in the beginning is Rs. 10,500, drawings during the year Rs. 6,500 and fresh capital introduced Rs. 3,500. What is the amount of capital at the end assuming no profit or loss.
(A) Rs. 7,500 (B) Rs. 13,500 (C) Rs. 20,500 (D) Rs. 5,00

Answer 1

Equation for Capital=

Closing capital (capital at the end of the year)

+ Drawings

+ Loss incurred during the year

- Profit earned during the year

-capital introduced during the year

=opening capital (capital at the beginning of the year)


Let closing capital (capital at the end of the year) be x

so

x + 6500 + 0 - 0 - 3500 = 10500

x = 10500 + 3500 - 6500

x = 7500

so closing capital (capital at the end of the year) = 7500..

Option A is the answer...