Crusoe Waterworks Company provides plumbing services. Transactions of Crusoe Waterworks during the first year of operations are given below. a) The owner, Robin Crusoe, invested $5,000 cash in the company. The cash was deposited in the business checking account.
b) Paid $4,000 cash for equipment to be used for plumbing repairs.
c) Borrowed $26,000 from a local bank and deposited the money in the checking account.
d) Paid $700 rent for the year.
e) Purchased $1,500 of office supplies on account.
f) Completed a plumbing repair project for a local lawyer and received $3,400 cash.
Calculate the amount of total owner's equity after recording the transactions. Assume office supplies of $1,500 are left at the end of the year.

Question

Quizplus · Accepted Answer

Owner's equity is calculated as initial investment plus net income. Initial investment is $5,000. Net income is revenue ($3,400) minus expenses ($700 rent), which equals $2,700. Total owner's equity is $5,000 + $2,700 = $7,700.

Crusoe Waterworks Company Provides Plumbing Services