X had started business with $R s . 2, 00, 000$ in the beginning of the year. During the year, he borrowed $R s . 1, 00, 000$ from Y. He further introduced $R s . 2, 00, 000$ in the business. He also gave $R s . 50, 000$ as loan to his son. Goods given away as charity by him were $R s . 20, 000$ . Profits earned by him were $R s . 2, 50, 000$ . He also withdraw $R s . 30, 000$ from the business. His capital at the end of the year would be__________.

R s . 5, 00, 000

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R s . 4, 00, 000

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R s . 6, 20, 000

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R s . 4, 80, 000

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Solution

The correct option is B $R s . 6, 20, 000$
In case there is no double entry system is followed, profit can be calculated by comparing the opening and closing capital. In the given situation this can be calculated as:

Opening Capital Rs.200000
Add: Capital Introduced Rs.200000
Add: Profit for the year Rs. 250000
Less: Loss for the year Rs.NIL
Less: Drawings Rs. 30000
--------------------
Capital at the end of the year Rs.620000
-------------------
Loan taken is a liability and loan given is asset, that will not affect the capital.

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