Question

T. Chin starts a business. Before he starts to sell anything, he buys fixtures at $2,000, a motor vehicle for $5,000 and stock of goods for $3,500. Although he has paid in full for the fixtures and the motor vehicle, he still owes $1,400 for some of the goods. J. Preston had lent Chin $3,000. Chin, after the above, has $2,800 in the business bank account and $100 cash in hand. Calculate T. Chin's capital.

Answer 1

In order to calculate T. Chin's capital, add up all his assets and subtract any liabilities. T. Chin's capital is $12,800.

Step-by-step explanation:

To calculate T. Chin's capital, we need to add up all his assets and subtract any liabilities. Let's start by calculating the total assets:

• The fixtures ($2,000)
• The motor vehicle ($5,000)
• The stock of goods ($3,500)
• The amount owed for goods ($1,400)
• The business bank account ($2,800)
• The cash in hand ($100)

Total Assets = $2,000 + $5,000 + $3,500 + $1,400 + $2,800 + $100 = $15,800

Next, we need to calculate the total liabilities:

The loan from J. Preston ($3,000)

Total Liabilities = $3,000

Finally, we can calculate T. Chin's capital:

T. Chin's Capital = Total Assets - Total Liabilities = $15,800 - $3,000 = $12,800