A sole trader's capital at the beginning of the year was ₦240,000. During the year, he made a net profit of ₦90,000 and withdrew ₦50,000 for personal use. He also introduced additional capital of ₦30,000. What is the closing capital?

Closing capital = Opening capital + Net profit − Drawings + Additional capital introduced = ₦240,000 + ₦90,000 − ₦50,000 + ₦30,000 = ₦310,000. A common error is to forget to add the additional capital, giving ₦280,000, or to add drawings instead of deducting them.