Capital introduced is $200. Capital brought forward at the beginning of the year amount to $400 and liabilities are $280. Assets are $360.
What is the retained profit for the year?
Answer
Asset = liabilities + capital
Capital = Assets – Liabilities
Ending capital = beginning capital + additional capital + profit (loss) -drawing
$200 + $400 + profit for the year = $360 – $280
$600 + profit (loss) = $80 , so profit (loss) = 80-600= – 520
Therefore, the profit for the year is in fact a loss of $520.