If net income for a proprietorship was $50,000, the owner withdrew $20,000 in cash, and the owner invested $10,000 in cash, the capital of the owner increased by $40,000.

Question

Quizplus · Accepted Answer

The owner's capital at the beginning of the period was:
Capital = Net Income - Withdrawals + Investments
Capital = $50,000 - $20,000 + $10,000
Capital = $40,000
The owner's capital increased by $40,000, which means the new capital balance is:
New Capital = Capital + Increase in Capital
New Capital = $40,000 + $40,000
New Capital = $80,000.

If Net Income for a Proprietorship Was $50,000, the Owner