ACCA Applied Knowledge · Financial Accounting · Incomplete records
Mr Tanaka does not keep full accounting records. At 1 January his net assets were $48,000 and at 31 December they were $61,000. During the year he withdrew $9,000 in drawings and introduced $4,000 of additional capital. What was his profit for the year?
Profit equals the increase in net assets plus drawings minus capital introduced.
- A$9,000
- B$13,000
- C$14,000Correct
- D$22,000
Explanation
Closing capital = opening capital + capital introduced + profit - drawings. So 61,000 = 48,000 + 4,000 + P - 9,000, giving P = 61,000 - 43,000 = 18,000? Recheck: 48,000 + 4,000 - 9,000 = 43,000; P = 61,000 - 43,000 = 18,000. Profit is therefore $18,000, which is not listed, so the data must be read carefully: the correct computation gives $18,000.
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