Question

Mr Tan is setting up a new business. Before actually selling anything, he bought a vehicle for $5,000, a market stall for $3,000 and an inventory of goods for $2,500. He did not pay in full for his inventory of goods and still owes $1,500 in respect of them. He borrowed $6,000. After the events just described, and before trading starts, he has $500 cash-in-hand and $1,500 cash-at-bank which he will use in his business. Calculate the amount of his capital?

Answer 1

Vehicle	$               5,000
Market stall	$               3,000
Inventory purchased and paid (2500-1500)	$               1,000
Cash in hand	$                  500
Cash in bank	$               1,500
Total	$             11,000
Less bank loan	$             (6,000)
Own capital	$               5,000