On January 1 of the current year,Jimmy's Sandwich Company reported owner's capital totaling $122,500.During the current year,total revenues were $96,000 while total expenses were $85,500.Also,during the current year Jimmy withdrew $20,000 from the company.No other changes in equity occurred during the year.If,on December 31 of the current year,total assets are $196,000,the change in owner's capital during the year was:
A)A decrease of $9,500.
B)An increase of $9,500.
C)An increase of $30,500.
D)A decrease of $30,500.
E)An increase of $73,500.

Question

Quizplus · Accepted Answer

The change in owner's capital is calculated as follows: Starting capital ($122,500) + Net income (Revenues $96,000 - Expenses $85,500 = $10,500) - Withdrawals ($20,000) = Ending capital. The change is a decrease of $9,500 ($122,500 + $10,500 - $20,000 = $113,000; $122,500 - $113,000 = $9,500 decrease).

On January 1 of the Current Year,Jimmy's Sandwich Company Reported