Eddie Howard's bookkeeper prepared a trial balance of the accounts at December 31, 2020 in order to prepare financial statements. Following is a summary of the trial balance. Based on the trial balance, how much was Eddie Howard's net income on the income statement and how much was Eddie Howard's Capital on the balance sheet? $\begin{array}{c}
\text { Eddie Howard } \
\text { TrialBalance } \
\text { December 31, 2020 }\
\\begin{array}{|l|r|r|}
\hline & {\text { Debit }} & {\text { Credit }} \
\hline \text { Total of asset accounts } & \$ 22,300 & \
\hline \text { Total of liability accounts } & & \$ 7,400 \
\hline \text { Eddie Howard, Capital } & & 6,200 \
\hline \text { Total of revenue accounts } & & 62,000 \
\hline \text { Total of expense accounts } & 53,300 & \
\hline & \$ 75,600 & \$ 75,600 \
\hline\end{array}
\end{array}$

Question

Eddie Howard's bookkeeper prepared a trial balance of the accounts at December 31, 2020 in order to prepare financial statements. Following is a summary of the trial balance. Based on the trial balance, how much was Eddie Howard's net income on the income statement and how much was Eddie Howard's Capital on the balance sheet? $\begin{array}{c}
\text { Eddie Howard } \
\text { TrialBalance } \
\text { December 31, 2020 }\
\\begin{array}{|l|r|r|}
\hline & {\text { Debit }} & {\text { Credit }} \
\hline \text { Total of asset accounts } & \$ 22,300 & \
\hline \text { Total of liability accounts } & & \$ 7,400 \
\hline \text { Eddie Howard, Capital } & & 6,200 \
\hline \text { Total of revenue accounts } & & 62,000 \
\hline \text { Total of expense accounts } & 53,300 & \
\hline & \$ 75,600 & \$ 75,600 \
\hline\end{array} 
\end{array}$

Quizplus · Accepted Answer

Net income is calculated by subtracting total expenses from total revenues, which is $62,000 - $53,300 = $8,700. The capital is calculated by adding net income to the initial capital, which is $6,200 + $8,700 = $14,900.

Eddie Howard's Bookkeeper Prepared a Trial Balance of the Accounts