At October 1, Boisclair Company reported owner's equity of $68,000. During October, the owner made additional investments of $10,000 and the company posted a net loss of $4,000. If owner's equity at October 31 totals $70,000, what amount of owner drawings were made during the month?

Question

Quizplus · Accepted Answer

The change in owner's equity can be calculated as follows:
Beginning owner's equity + additional investments - net income (or + net loss) - owner's drawings = Ending owner's equity
$68,000 + $10,000 - $4,000 - owner's drawings = $70,000
Solving for owner's drawings, we get:
$8,000 - owner's drawings = $70,000
owner's drawings = $8,000 - $70,000
owner's drawings = -$2,000 (This indicates that there were no owner's drawings and instead the company's assets increased by $2,000, which is consistent with the increase in owner's equity.) Therefore, the answer is B) $4,000.

At October 1, Boisclair Company Reported Owner's Equity of $68,000