The profit earned by a business in 20X3 was $18,125. The proprietor injected new capital of $2,000 during the year and withdrew goods for his private use which had cost $550.
If net assets at the beginning of 20X3 were $25,425 ,what were the closing net assets ?
Answer
Assets = Liabilities + Closing Capital (or Assets = Liabilities + Equity)
Closing Capital = opening capital + profit (loss) + Additional Capital – drawing
= 25,425 + 18,125+ 2,000 – 550
= $45,000