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1 November, 07:47

At the beginning of 2009, a company's balance sheet reported the following balances: Total Assets = $125,000; Total Liabilities = $75,000; and Owner's Capital = $50,000. During 2009, the company reported revenues of $46,000 and expenses of $30,000. In addition, owner's withdrawals for the year totaled $20,000. Assuming no other changes to owner's capital, the balance in the owner's capital account at the end of 2009 would be:

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  1. 1 November, 11:20
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    Ending capital = $46,000

    Explanation:

    Given,

    Total Assets = $125,000;

    Total Liabilities = $75,000; and

    Owner's Capital = $50,000.

    Revenues = $46,000;

    Expenses = $30,000;

    Withdrawals = $20,000;

    During 2009,

    We know,

    Net Income = (Revenue - Expenses)

    Net Income = $ (46,000 - 30,000)

    Net Income = $16,000

    The end of 2009

    Beginning Capital = $50,000

    Add: Net profit = 16,000

    Less: Drawings = (20,000)

    Ending capital = $46,000
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