Mofro's Computer Repair Shop started the year with total assets of $300,000 and total liabilities of $200,000.During the year, the business recorded $500,000 in computer repair revenues, $300,000 in expenses, and Mofro paid dividends of $50,000.The net income reported by Mofro's Computer Repair Shop for the year was

Question

Quizplus · Accepted Answer

Net income is calculated by subtracting total expenses from total revenues, so
Net Income = Total Revenues - Total Expenses
Net Income = $500,000 - $300,000
Net Income = $200,000
Then, to calculate the owner's equity at the end of the year, we add net income to the beginning owner's equity and subtract dividends paid:
Ending Owner's Equity = Beginning Owner's Equity + Net Income - Dividends Paid
Ending Owner's Equity = $300,000 + $200,000 - $50,000
Ending Owner's Equity = $450,000
Therefore, the net income reported by Mofro's Computer Repair Shop for the year was $200,000.

Mofro's Computer Repair Shop Started the Year with Total Assets