On January 1 of the current year, Bob's Lawn Care Service reported owner's capital totaling $122,500. During the current year, total revenues were $96,000 while total expenses were $85,500. Also, during the current year Bob withdrew $20,000 from the company. No other changes in equity occurred during the year. If, on December 31 of the current year, total assets are $196,000, the change in owner's capital during the year was:
A) A decrease of $9,500.
B) An increase of $9,500.
C) An increase of $30,500.
D) A decrease of $30,500.
E) Impossible to determine from the information provided.

Question

Quizplus · Accepted Answer

The change in owner's capital is calculated as: Initial capital + Revenues - Expenses - Withdrawals. So, $122,500 + $96,000 - $85,500 - $20,000 = $113,000. The change is $113,000 - $122,500 = -$9,500, indicating a decrease of $9,500.

On January 1 of the Current Year, Bob's Lawn Care