Prior to closing, total revenues were $12,840,000 and total expenses were $9,975,000.

During the year, the owner made no additional investments and withdrew $630,000. After the closing entries, how much did the owner's capital account

change?

Question

Business

Barrett

17 December, 10:21

Prior to closing, total revenues were $12,840,000 and total expenses were $9,975,000.

During the year, the owner made no additional investments and withdrew $630,000. After the closing entries, how much did the owner's capital account

change?

+5

Answers (1)

Know the Answer?

Xavier Huerta · Answer 1

Owner's capital account is increased by $2,235,000.

Explanation:

At the end of the period the closing entries are made to close the temporary accounts of Revenue and expenses and transfer the balance to retained earning or owners capital account.

Net income for the year = Total revenue - Total Expenses

Net income for the year = $12,840,000 - 9,975,000

Net income for the year = $2,865,000

Changes in owner's capital account during the period = net income / loss - drawings during the period

Changes in owner's capital account during the period = $2,865,000 - $630,000

Changes in owner's capital account during the period = $2,235,000

Prior to closing, total revenues were $12,840,000 and total expenses were $9,975,000.During the year, the owner made no additional investments and withdrew $630,000. After the closing entries, how much did the owner's capital accountchange?

Prior to closing, total revenues were $12,840,000 and total expenses were $9,975,000.

During the year, the owner made no additional investments and withdrew $630,000. After the closing entries, how much did the owner's capital account

change?