On January 1, 2022, Utah Utility Company reported owner's equity of $705,000. During the year, the owner withdrew cash of $30,000. At December 31, 2022, the balance in owner's equity was $795,000. What amount of net income or net loss would the company report for 2022?

Question

Quizplus · Accepted Answer

The change in owner's equity can be calculated as follows:
Beginning owner's equity + Net income - Owner withdrawals = Ending owner's equity
$705,000 + Net income - $30,000 = $795,000
Net income = $795,000 - $705,000 + $30,000
Net income = $120,000

On January 1, 2022, Utah Utility Company Reported Owner's Equity