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 changed by what amount from the beginning of the year to the end of the year?

Question

Quizplus · Accepted Answer

Eli's Owner's Capital balance at the beginning of the year was calculated as follows: 
Owner's Capital = Total Assets - Total Liabilities 
Owner's Capital = $300,000 - $200,000 
Owner's Capital = $100,000

During the year, the business earned $400,000 in revenues, which exceeded the expenses of $300,000, resulting in a net income of $100,000. This net income increases the Owner's Capital balance.

The withdrawal of $50,000 by Eli decreases the Owner's Capital balance.

Therefore, the change in the Owner's Capital balance from the beginning of the year to the end of the year is:

Beginning Owner's Capital balance + Net Income - Owner's Withdrawal 
$100,000 + $100,000 - $50,000 = $150,000

The correct answer is option B, which represents the amount that Eli withdrew during the year.

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