The following information is taken from a sole trader's accounts: Opening Capital $12,000, Closing Capital $13,800. Net Profit $3,000. What are the trader's drawings?
Answer: $1,200
Explanation
To find the trader's drawings, use the following formula:
Drawings = Opening Capital + Net Profit - Closing Capital
Given:
- Opening Capital = $12,000
- Closing Capital = $13,800
- Net Profit = $3,000
Drawings = $12,000 + $3,000 - $13,800 = $1,200
So, the trader's drawings are $1,200.
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