A sole trader’s business made a profit of $65,000 during the year ended 31 March 20X7. This figure was after deducting $200 per week wages for himself. In addition, he put his home telephone bill through the business books, amounting to $800 plus sales tax at 15%. He is registered for sales tax and therefore has charged only the net amount to his statement of profit or loss and other comprehensive income.
His capital at 1 April 20X6 was $13,000. What was his capital at 31 March 20X7?
Answer
| $ | |
| Capital at 1 April 20X6 | 13,000 |
| Add: profit (after drawings) | 65,000 |
| Less: sales tax element(800 x 16%) | (128) |
| Capital at 31 March 20X7 | 77,872 |