Opening capital balances of partners will be calculated by using which of the following formula:-

Closing Capital - Addition to the Capital + Withdrawal of Capital - interest on Capital + Drawings + interest on drawings + Share of Loss - Share of Profit

The correct answer is Option (3) → Closing Capital - Addition to the Capital + Withdrawal of Capital - interest on Capital + Drawings + interest on drawings + Share of Loss - Share of Profit

To find Opening Capital, we start from Closing Capital and reverse all the adjustments that were made during the year:

• Subtract additional capital introduced.

• Add back capital withdrawn.

• Subtract interest on capital (since it was added to arrive at closing).

• Add back drawings (since they reduced capital during the year).

• Add back interest on drawings (since it was subtracted earlier).

• Add back share of loss (as it reduced capital).

• Subtract share of profit (as it increased capital).