Jackson's Small Engine Repair Shop, a proprietorship, started the year with total assets of $60,000 and total liabilities of $40,000. During the year, the business recorded $100,000 in repair revenues, $55,000 in expenses, and Mike Jackson, the owner, withdrew $10,000. Jackson's Capital balance changed by what amount from the beginning of the year to the end of the year?

Question

Quizplus · Accepted Answer

The change in Jackson's Capital balance is calculated by taking the net income (revenues minus expenses) and subtracting the owner's withdrawals. Net income is $100,000 - $55,000 = $45,000. After subtracting the owner's withdrawals of $10,000, the change in capital is $45,000 - $10,000 = $35,000.

Jackson's Small Engine Repair Shop, a Proprietorship, Started the Year