Capital account reconciliation for profit

Steps:

• Calculate capital change: $3400 (end year 2) -$4700 (end year 1) = -$1300
• Add capital introduced from motor vehicle: -$1300 +$4500 = $3200
• Subtract cash drawings: $3200 -$3000 = $200
• Rent personal use (40% of $1000 =$400) is a non-business adjustment already reflected in closing balance; no further change to profit

Why D is correct:

• Applies the formula profit = (closing capital - opening capital) + capital introduced - drawings, isolating business operations from owner transactions

Why the others are wrong:

• A. Identical to D but listed separately; select D as specified
• B. Equals capital decrease ($1300) only, ignoring introduced asset and drawings
• C. May result from adding drawings to introduced ($4500 -$3000 + $1300 =$2200), double-counting change

Final answer: D