Question

Use the adjusted trial balance for stockton company below to answer the question that follow. stockton company adjusted trial balance december 31 cash 6,530 accounts receivable 2,100 prepaid expenses 700 equipment 13,700 accumulated depreciation 1,100 accounts payable 1,900 notes payable 4,300 bob steely, capital 12,940 bob steely, withdrawals 790 fees earned 9,250 wages expense 2,500 rent expense 1,960 utilities expense 775 depreciation expense 250 miscellaneous expense 185 totals 29,490 29,490 determine the owner's equity ending balance.

Answer 1

The Owner’s Equity ending balance is $15,730.

In order to solve this question you need to determine what information you need from what has been provided. In order to calculate the owner’s equity we will need to first calculate the income or loss, which we will do by subtracting the expenses from the income.

Income (Fees Earned) = $9,250

Expenses = $2,500 + 1,960 + 775 + 250 + 185 = $5,670

The formula for Net Income is Income - Expenses = Net Income

$9,250 - $5,670 = $3,580

Now that we have the Net Income we can calculate the Owner’s Equity ending balance. The formula is Owner’s Capital + Net Income - Withdrawals

$12,940 + 3,580 - 790 = $15,730