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?

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?

A

₦165,000

B

₦635,000

C

₦600,000

D₦156,000

Answer is A

Let:
OC = Opening Capital
AC = Additional capital
NP = Net profit
D = Drawing
CC = Closing Capital

then,

AC + DC + NP – D = CC
250,000 + P – 15,000 = 400,000
P = 400,000 – 250,000 + 15,000
P = ₦165,000

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