Question

On 31st March, 2018, the total assets and external liabilities were Rs. 2,00,000 and Rs. 6,000 respectively. During the year, the proprietor had introduced capital of Rs. 20,000 and withdrawn Rs. 12,000 for personal use. He made a profit of Rs. 20,000 during the year. Calculate the capital as on 1st April, 2017.

Answer 1

Capital on 31st March 2018 = Total Assets – External Liabilities 

= Rs. 2,00,000 – Rs. 6,000 = Rs. 1,94,000 Capital on 01st April 2017 

= Capital on March 31, 2018 – Additional Capital + Drawings – Profit 

= Rs. 1,94,000 – Rs. 20,000 + Rs. 12,000 – Rs. 20,000 

= Rs. 1,66,000