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
