At the beginning of the year,Sigma Company's balance sheet reported Total Assets of $195,000 and Total Liabilities of $75,000.During the year,the company reported total revenues of $226,000 and expenses of $175,000.Also,owner withdrawals during the year totaled $48,000.Assuming no other changes to owner's capital,the balance in the owner's capital account at the end of the year would be:
A)$174,000.
B)$78,000.
C)$171,000.
D)$120,000.
E)$123,000.

Question

Quizplus · Accepted Answer

The owner's capital at the beginning of the year is Total Assets - Total Liabilities = $195,000 - $75,000 = $120,000. During the year, the net income is Revenues - Expenses = $226,000 - $175,000 = $51,000. The ending owner's capital is the beginning capital + net income - withdrawals = $120,000 + $51,000 - $48,000 = $123,000.

At the Beginning of the Year,Sigma Company's Balance Sheet Reported