Mwalimu Enterprises which deals with the sale of stationery had the following balances as at 31st July 2024:
Furniture: Ksh 150,000
Stock: Ksh 83,000
Creditors: Ksh 30,900
Debtors: Ksh 23,200
Vehicle: Ksh 250,000
Which of the following represents the capital for the business? Ksh:
A. 256,200
B. 250,000
Answer (2)
To determine the capital of Mwalimu Enterprises as of 31st July 2024, we need to use the accounting equation:
Capital (Equity) = Assets − Liabilities
Let's identify the assets and liabilities from the given balances:
Assets
Furniture: Ksh 150,000
Stock: Ksh 83,000
Debtors: Ksh 23,200
Vehicle: Ksh 250,000
The total assets are calculated as:
Total Assets = 150 , 000 + 83 , 000 + 23 , 200 + 250 , 000 = 506 , 200
Liabilities
Creditors: Ksh 30,900
Now, substitute these figures into the accounting equation:
Capital = 506 , 200 − 30 , 900 = 475 , 300
Therefore, the capital for Mwalimu Enterprises as of 31st July 2024 is Ksh 475,300.
Given the multiple-choice options:
A. 256,200
B. 250,000
Neither option A nor B correctly represents the calculated capital, which is Ksh 475,300.
The capital for Mwalimu Enterprises as of 31st July 2024 is Ksh 475,300, calculated using the accounting equation. Neither of the provided options, A (256,200) or B (250,000), is correct. Therefore, the correct capital is not listed in the options.
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