Question

Owner's equity at the start of the period is $35,000; net income for the period is $30,000; the total investments by the owner are $15,000, and total withdrawals by the owner is $5,000.
The owner's equity at the end of the period is:

a) $80,000. b)$75,000. c)$85,000. d) $40,000.

Answer 1

Answer:

Option "B" is the correct answer to the following question.

Explanation:

Given:

Owner's equity (Opening) = $35,000

Net income = $30,000

Investments by owner = $15,000

Withdrawals = $5,000.

Owner's equity (Closing) = ?

Computation of closing equity:

Owner's equity (Closing) = Owner's equity (Opening) + Net income + Investments - Withdrawals

Owner's equity (Closing) = $35,000 + 30,000 + $15,000 - $5,000

Owner's equity (Closing) = $80,000 - $5,000

Owner's equity (Closing) = $75,000