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Question
On 31st March, 2019, the total assets and external liabilities were ₹ 2,00,000 and ₹ 6,000 respectively. During the year, the proprietor had introduced capital of ₹ 20,000 and withdrawn ₹ 12,000 for personal use. He made a profit of ₹ 20,000 during the year. Calculate the capital as on 1st April, 2018.
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Solution
Capital as on March 31, 2019 = Total Assets − External Liabilities
= 2,00,000 − 6,000 = Rs 1,94,000
Capital on April 01, 2018 = Capital on March 31,2019 − Additional Capital + Drawings − Profit
= 1,94,000 − 20,000 + 12,000 − 20,000 = Rs 1,66,000
Capital as on March 31, 2019 = Total Assets − External Liabilities
= 2,00,000 − 6,000 = Rs 1,94,000
Capital on April 01, 2018 = Capital on March 31,2019 − Additional Capital + Drawings − Profit
= 1,94,000 − 20,000 + 12,000 − 20,000 = Rs 1,66,000
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