Capital at the start was ₦250,000, while capital at the end of the year was ₦400,000. Drawings during the year amounted to ₦15,000. What is profit?

A. ₦165,000
B. ₦635,000
C. ₦600,000
D. ₦156,000

Correct Answer: Option A

A. ₦165,000

Explanation

Using the formular

AC + DC + NP – D = CC
Where OC = Opening Capital
AC = Additional capital
NP = Net profit
D = Drawing
CC = Closing Capital
Therefore,
250,000 + P – 15,000 = 400,000
P = 400,000 – 250,000 + 15,000
P = ₦165,000