Use the information below to answer question .Capital.......₦12 700........Purchases......₦7 100 Debtors.......₦4 000........Stationery.....₦1 900 Sales.......
Question 1 Report
Use the information below to answer question .Capital.......₦12 700........Purchases......₦7 100
Debtors.......₦4 000........Stationery.....₦1 900
Sales.........₦2 400........Wages..........₦1 230The owners wishes to maintain an account equal to of capital as drawings.What is the amount withdrawn?
Answer Details
To find out the amount withdrawn by the owner, we need to calculate the balance in the capital account after taking into account the other transactions.
Starting with the initial capital of ₦12,700 and subtracting the purchases of ₦7,100, we get a balance of ₦5,600.
Next, we add the debtors of ₦4,000 and the stationery of ₦1,900 to get a balance of ₦11,500.
Then we subtract the sales of ₦2,400 and the wages of ₦1,230 to get a final balance of ₦7,870 in the capital account.
The owner wishes to maintain an account equal to 75% of capital as drawings. Therefore, the amount withdrawn by the owner would be 25% of ₦7,870, which is:
(25/100) x ₦7,870 = ₦1,967.50
Rounding this off to the nearest Naira, we get ₦1,965 as the amount withdrawn by the owner.
Therefore, the correct answer is ₦1,965.
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