Mr B started a business with a capital of 100 0... - SS2 Accounting Computation of Profits From Two Balance Sheets Showing The Opening And Closing Capital Question
Mr B started a business with a capital of ₦100,000. At the end of the year, his capital had decreased to ₦80,000. He made additional investments of ₦10,000 during the year and made drawings of ₦5,000. What is his profit for the year?
Profit = Closing Capital - Opening Capital - Additional Investments + Drawings
Profit = ₦80,000 - ₦100,000 - ₦10,000 - ₦5,000
Profit = -₦35,000
Since the result is negative, it means that Mr B incurred a loss of ₦35,000 during the year.
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