Luis Consulting started the year with total assets of $60000 and total liabilities of $17000. During the year the business recorded $48000 in consulting revenues and $36000 in expenses. Luis made an additional investment of $8000 and withdrew cash of $9000 during the year. The owner's equity at the end of the year was
A) $33000.
B) $54000.
C) $57000.
D) $63000.

Question

Quizplus · Accepted Answer

The owner's equity at the end of the year can be calculated as follows: Start with the initial owner's equity, which is total assets minus total liabilities ($60,000 - $17,000 = $43,000). Add the net income for the year, which is revenues minus expenses ($48,000 - $36,000 = $12,000). Then, add the additional investment ($8,000) and subtract the withdrawals ($9,000). So, the calculation is $43,000 + $12,000 + $8,000 - $9,000 = $54,000.

Luis Consulting Started the Year with Total Assets of $60000