Question

1.7 Basil Yamey is setting up a new business. Before selling anything, he bought a van for £9,000; a

transportable market stall for £1,800; a computer for £280; and an inventory of goods for £11,200. Fie
did not pay in full for his inventory of goods and still owes £5,000 for them. Fie borrowed £8,000 from
Luca Pacioli. After the eventsjust described, and before trading starts, he has £900 cash in hand and
£6,300 in the bank. Calculate the amount of his capital.

Answer 1

the amount of Basil Yamey's capital is £16,480.

Explanation:

To calculate Basil Yamey's capital, we need to add up the value of his assets and subtract his liabilities.

The value of his assets is:

Van: £9,000

Market stall: £1,800

Computer: £280

Inventory of goods: £11,200

Cash in hand: £900

Money in the bank: £6,300

Total value of assets = £9,000 + £1,800 + £280 + £11,200 + £900 + £6,300 = £29,480

His liabilities are:

Amount still owed for inventory of goods: £5,000

Amount borrowed from Luca Pacioli: £8,000

Total liabilities = £5,000 + £8,000 = £13,000

Therefore, Basil Yamey's capital is:

Capital = Total value of assets - Total liabilities

Capital = £29,480 - £13,000 = £16,480

So the amount of Basil Yamey's capital is £16,480.

Answer 2

Basil Yamey's capital is the total amount of money that he has invested in his business. This can be calculated as the sum of the cost of the assets that he has purchased, minus any outstanding debts, plus any cash or cash equivalents he has on hand.

The cost of the assets that Basil has purchased is:

£9,000 (van) + £1,800 (market stall) + £280 (computer) + £11,200 (inventory) = £21,280

He still owes £5,000 for the inventory, so the total cost of the assets minus the outstanding debt is:

£21,280 - £5,000 = £16,280

He borrowed £8,000, so the total amount of his capital is:

£16,280 + £8,000 = £24,280

He also has cash on hand and in the bank:

£900 (cash) + £6,300 (bank balance) = £7,200

So, Basil Yamey's total capital is £24,280 + £7,200 = £31,480.