Capital at start was ₦250,000, while capital at the end of the year was ₦400,000. Drawings during the year amounted to ₦15,000. What is the profit?
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Correct Answer: Option A
Explanation:
Using the formular
AC + DC + NP - D = CC
Where OC = Opening Capital
AC = Additional capital
NP = Net profit
D = Drawing
CC = Closing Capital
Therefore,
250,000 + P - 15,000 = 400,000
P = 400,000 - 250,000 + 15,000
P = ₦165,000
Using the formular
AC + DC + NP - D = CC
Where OC = Opening Capital
AC = Additional capital
NP = Net profit
D = Drawing
CC = Closing Capital
Therefore,
250,000 + P - 15,000 = 400,000
P = 400,000 - 250,000 + 15,000
P = ₦165,000