Question

Lee opened his new business on 1 January 2016. On that date, the only asset was a bank balance of $10,000. During the year, Lee’d drawings from the business totalled $35,000. On 31 December 2016, the assets and liabilities of the business were as follows: · Computers and furniture $60,000, · inventory of raw materials $16,500, · finished goods, at cost $7,400, · bank overdraft $11,600, · trade payables, $5,500, · prepayments $1,500, · trade receivables $4,500, · the provision for bad debts $2,000, · bank loan $39,000, · interest payable $500, · accrued expenses, $2,600. What is the profit of the business in the year ended 31 December 2016?

Q: Answer-&lt;p&gt;&amp;nbsp; Lee opened his new business on 1 January 2016. On that date, the only asset was...

Total assets on 31 Dec Computers and furniture inventory of raw material finished goods prepayments trade receivables 60,000 16,500 7,400 1,500 4,500 89,900 Total liabilities on 31 dec bank overdraft trades payable provision for bad debts bank loan interest payable accrued expenses 11,600 5,500200039,0005002600 61,200 As per accounting equation, Equity or Capital Assets ndash liabilities 89,900 ndash 61,200 28,700 As such, the closing Capital on 31st Dec is 28,700. Closing Capital Opening capital Profit for the year ndash Drawings 28,700 10,000 profit ndash 35,000 Or Profit 53,700