Accounting 9706 · AS & A Level · The accounting system

The accounting system — practice question

A trader began trading on 1 January with capital of $\$120\,000$. On 31 December, the balance on the capital account stood at $\$150\,000$ after the profit for the year of $\$70\,000$ and an amount for drawings had been entered. Over the year, the trader introduced a motor vehicle that had previously been used privately. It had cost $\$30\,000$ but, when transferred into the business, it was valued at $\$20\,000$. The trader also added a further $\$25\,000$ in cash. What was the drawings figure for the year?

  • A$\$40\,000$
  • B$\$60\,000$
  • C$\$85\,000$
  • D$\$95\,000$

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