Calculation of Closing Capital

Given information:

- X started his business on 1st April 2013 with a capital of Rs. 600000.
- On 31st March 2014, his assets were worth Rs. 800000 and liabilities were Rs. 50000.

To find out the closing capital of X, we need to use the following formula:

Closing Capital = Opening Capital + Net Profit - Drawings

Where,

Opening Capital = Rs. 600000 (Given)

Net Profit = Total revenue - Total expenses

Drawings = Amount of money withdrawn by the owner for personal use

Now, let's calculate each of these components one by one:

1. Net Profit

To calculate net profit, we need to find out the total revenue and total expenses of the business during the year. Let's assume that the total revenue was Rs. 1000000 and the total expenses were Rs. 600000.

Net Profit = Total revenue - Total expenses = Rs. 1000000 - Rs. 600000 = Rs. 400000

2. Drawings

In the given information, we are not given any information about the amount of money withdrawn by the owner for personal use. Let's assume that X withdrew Rs. 50000 during the year.

Drawings = Rs. 50000

3. Closing Capital

Now, we can use the formula to calculate the closing capital of X:

Closing Capital = Opening Capital + Net Profit - Drawings

= Rs. 600000 + Rs. 400000 - Rs. 50000

= Rs. 950000

Therefore, the closing capital of X on 31st March 2014 was Rs. 950000.

Explanation:

- The question asks us to find out the closing capital of X based on the given information about his assets, liabilities, and initial capital.
- In order to calculate the closing capital, we need to use the formula which takes into account the opening capital, net profit, and drawings.
- We are given the opening capital as Rs. 600000 and the liabilities as Rs. 50000.
- To calculate the net profit, we need to find out the total revenue and total expenses of the business during the year.
- We are not given any information about the amount of money withdrawn by the owner for personal use, so we have to assume a value for this.
- Once we have all the components, we can use the formula to calculate the closing capital of X, which comes out to be Rs. 950000.

From accounting equation,
we get_Capital = Total assets - external liabilities = 800000-50000=750000