Question

Insurance Agency started the year with a beginning capital balance of $ 25 comma 000. During the​ year, Rogers Insurance Agency earned $ 41 comma 000 of Service Revenue and incurred $ 26 comma 000 of various expenses. Rogers withdrew $ 11 comma 000 from the business. After the closing entries are recorded and​ posted, what will be the balance of Rogers​, ​Capital?

Answer 1

Answer:

The ending balance of Rogers​, ​Capital is $29,000

Explanation:

In this question, we use the formula of opening capital which is shown below:

Opening capital = Closing capital + drawings - profit earned + loss incurred - additional capital

where,

The profit earned = Revenue - expenses

                             = $41,000 - $26,000

                             = $15,000

And, the other items would remain the same

$25,000 = Closing capital + $11,000 - $15,000 + $0 - $0

$25,000 = Closing capital - $4,000

So, the closing capital = $25,000 + $4,000

                                     = $29,000