Use the following information to answer the question below Opening capital ---10,800 Drawings----------- 2,500 Trade creditors ----2,560 Trade debtors -----...
Question 1 Report
Use the following information to answer the question below
Opening capital ---10,800
Drawings----------- 2,500
Trade creditors ----2,560
Trade debtors ------2,880
Cash in hand -------1,000
Net profit------------- 6,000
The closing capital is
Answer Details
The closing capital can be calculated using the following formula:
Closing Capital = Opening Capital + Net Profit - Drawings
Plugging in the values from the information given, we get:
Closing Capital = 10,800 + 6,000 - 2,500
Closing Capital = 14,300
Therefore, the closing capital is 14,300. This represents the total amount of capital that the business has at the end of the accounting period after taking into account the net profit earned during the period and the amount withdrawn by the owner. The closing capital is an important figure that helps the business owner to understand the financial health of the business and make decisions about its future operations.
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