Mr. X's Capital account has a balance of P 100,000 on March 31, 2017. Withdrawals for personal expenses during April amounted to P 15,000. At the end of April, the Capital account has a balance of P135, 000. Mr. X's net income for April isSelect one:a.P 50,000b.P 20,000c.P 85,000d.P 35,000
Question
Mr. X's Capital account has a balance of P 100,000 on March 31, 2017. Withdrawals for personal expenses during April amounted to P 15,000. At the end of April, the Capital account has a balance of P135, 000. Mr. X's net income for April isSelect one:a.P 50,000b.P 20,000c.P 85,000d.P 35,000
Solution
To solve this problem, we need to understand that the Capital account balance changes due to either additional investments, withdrawals, or profits/losses from the business.
Here's how we can calculate it:
- Start with the initial Capital account balance on March 31, 2017, which is P 100,000.
- Subtract the withdrawals for personal expenses during April, which is P 15,000. This gives us P 100,000 - P 15,000 = P 85,000. This is the expected Capital account balance without considering any profits or losses.
- Now, compare this with the actual Capital account balance at the end of April, which is P 135,000. The difference between the actual and expected Capital account balance is the net income for April.
- So, the net income for April is P 135,000 - P 85,000 = P 50,000.
Therefore, the answer is a. P 50,000.
Similar Questions
Mr. A has the following revenue transactions during April of the current year: Rendered services: Cash, P5, 000 & on credit, P3, 500; received P5000 advance payment for services to be rendered in May. The amount of income to be recognized in April isSelect one:a.P10,000b.P13,500c.P5,000d.P8,500
Prepare trading Account profit and loss and profit and losss Approprition Account for the year ended 31 st March , 2019 and Balance sheet as at that date after accounting the following adjustments :(i ) stock as at 31 st March , 2019 was Rs. 50.000,(ii) Rent is Rs. 10.000 per month ,(iii) Depreciate Furniture and fixtures and Computers @ 20 % p.a ,Machinery @ 10% p.a and(iv) interest on capitals is allowed @ 6% p.a .
) Eliza Enterprises has the following account balances at the end of thefinancial period (all figures are in shillings) as at December 31, 2018:Service revenue 700,000Capital 150,000Equipment 200,000Operating expenses 625,000Cash 175,000Drawings 50,000Supplies 25,000Accounts payable 100,000Accounts receivable 75,000Required:Prepare Eliza’s balance sheet as at December 31, 2018.
If this year's current account balance is–100 billiondollarsand the capital account balance is150 billiondollarsthen the amount of official reserves wil
The following are account balances for Molto Traders for October 2019.Capital 45,000Accounts payable 6,000Equipment 29,000Sales revenue 23,000Drawings 6,000Insurance expense 3,500Purchases 11,000Utilities expense 700Inventory September 1, 2018 2,800Salaries and wages expense 9,000Accounts receivable 10,000Rent expense 2,000Required:a) Prepare the trial balance as at October 31, 2019.
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.