Question

Robert withdrew $100,000 from an account that paid 10 percent annual interest and used the funds to purchase real estate. After one year he sold the property for $120,000. The accounting profit on this deal was:

Answer 1

$20,000

Explanation:

Data provided in the question

Sale value = $120,000

Withdrawn amount = $100,000

The computation of accounting profit on this deal is shown below:-

Accounting profit on this deal = Sale value - Withdrawn amount

= $120,000 - $100,000

= $20,000

Therefore for computing the accounting profit on this deal we simply applied the above formula.