Tara westmont, the proprietor of tiptoe shoes, had annual revenues of $205,000, expenses of $113,700, and withdrew $26,000 from the business during the current year. the owner's capital account before closing had a balance of $317,000. the ending owner's capital balance after closing is:

Question

Jeramiah Allen

Business

17 October, 09:48

Tara westmont, the proprietor of tiptoe shoes, had annual revenues of $205,000, expenses of $113,700, and withdrew $26,000 from the business during the current year. the owner's capital account before closing had a balance of $317,000. the ending owner's capital balance after closing is:

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Sterling Patrick · Answer 1

The ending owner's capital balance after closing is $382,300.

The company had a net profit for the year of $91,300. This is calculated by subtracting expenses from net income. $205,000-$113,700 = $91,300.

In order to calculate the the ending owner's capital for the year the accountant will add the net income to the starting owner's equity, and then subtract the amount that the owner withdrew from the business.

Starting owner's equity ($317,000) + net income ($91,300) = $408,300 and then subtract the amount withdrawn ($26,000) = $382,300, which is the ending owner's equity balance.