Eli's Electronic Repair Shop started the year with total assets of $300000 and total liabilities of $200000. During the year the business recorded $400000 in electronic repair revenues $300000 in expenses and Eli withdrew $50000. Eli's Owner's Capital balance at the end of the year was

Question

Quizplus · Accepted Answer

To calculate Eli's ending Owner's Capital balance, we need to use the accounting equation:

Assets = Liabilities + Owner's Capital

We know that at the beginning of the year, Eli's total assets were $300000 and total liabilities were $200000. Therefore, the owner's capital at the beginning of the year was:

Owner's Capital = Assets - Liabilities
Owner's Capital = $300000 - $200000
Owner's Capital = $100000

During the year, Eli recorded $400000 in electronic repair revenues and $300000 in expenses. This gives us a net income of:

Net Income = Revenues - Expenses
Net Income = $400000 - $300000
Net Income = $100000

Eli also withdrew $50000 from the business, which is considered a reduction in owner's capital. Therefore, we can calculate Eli's ending owner's capital balance as:

Ending Owner's Capital = Beginning Owner's Capital + Net Income - Withdrawals
Ending Owner's Capital = $100000 + $100000 - $50000
Ending Owner's Capital = $150000

Therefore, the correct answer is C) $150000.

Eli's Electronic Repair Shop Started the Year with Total Assets