Given: Capital at the beginning...............₦20 000 Drawings...............................₦3 000 Capital................................₦30 000 New capit...
Question 1 Report
Given:
Capital at the beginning...............₦20 000
Drawings...............................₦3 000
Capital................................₦30 000
New capital introduced.................₦8 000What is the profit for the period?
Answer Details
To find the profit for the period, we need to calculate the increase in capital. The increase in capital is equal to the new capital introduced plus the profit for the period minus any drawings.
Increase in capital = New capital + Profit - Drawings
We are given:
Capital at the beginning = ₦20,000
Drawings = ₦3,000
Capital = ₦30,000
New capital introduced = ₦8,000
We can use these values to find the profit:
Profit = Increase in capital - New capital introduced + Drawings
We know that the increase in capital is the difference between the ending capital and the beginning capital:
Increase in capital = Capital - Capital at the beginning
Increase in capital = ₦30,000 - ₦20,000
Increase in capital = ₦10,000
Now we can substitute the values into the profit formula:
Profit = Increase in capital - New capital introduced + Drawings
Profit = ₦10,000 - ₦8,000 + ₦3,000
Profit = ₦5,000
Therefore, the profit for the period is ₦5,000. The answer is.
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