Following is a list of account balances (except for owner's capital)of Wilson Mowing Service as of December 31 of the first year of operation: $$\begin{array} { | l | r | }
\hline \text { Accounts receivable } & \$ 2,500 \
\hline \text { Accounts payable } & 3,500 \
\hline \text { Salary expense } & 4,500 \
\hline \text { Repairs expense } & 800 \
\hline \text { Truck } & 8,500 \
\hline \text { Equipment } & 6,300 \
\hline \text { Notes payable } & 8,200 \
\hline \text { Cash } & 6,800 \
\hline \text { Supplies expense } & 1,600 \
\hline \text { Service revenue } & 31,900 \
\hline \text { Gasoline expense } & 3,800 \
\hline \text { Salary payable } & 200 \
\hline
\end{array}$$
-The proprietor,J.D.Wilson,contributed $3,000 at the beginning of the year; during the year,the proprietor made $12,000 in drawings.
At the end of the year,what is the amount of total owner's equity?
A) $11,900
B) $24,100
C) $21,200
D) $12,200

Question

Following is a list of account balances (except for owner's capital)of Wilson Mowing Service as of December 31 of the first year of operation: $$\begin{array} { | l | r | } 
\hline \text { Accounts receivable } & \$ 2,500 \
\hline \text { Accounts payable } & 3,500 \
\hline \text { Salary expense } & 4,500 \
\hline \text { Repairs expense } & 800 \
\hline \text { Truck } & 8,500 \
\hline \text { Equipment } & 6,300 \
\hline \text { Notes payable } & 8,200 \
\hline \text { Cash } & 6,800 \
\hline \text { Supplies expense } & 1,600 \
\hline \text { Service revenue } & 31,900 \
\hline \text { Gasoline expense } & 3,800 \
\hline \text { Salary payable } & 200 \
\hline
\end{array}$$
-The proprietor,J.D.Wilson,contributed $3,000 at the beginning of the year; during the year,the proprietor made $12,000 in drawings.
At the end of the year,what is the amount of total owner's equity?
A) $11,900
B) $24,100
C) $21,200
D) $12,200

Quizplus · Accepted Answer

To calculate the total owner's equity at the end of the year, we start with the initial contribution of $3,000, add the net income (or subtract the net loss), and then subtract any drawings. First, calculate the net income by subtracting total expenses from total revenues. Total expenses include salary expense, repairs expense, supplies expense, and gasoline expense, which sum up to $10,700. The service revenue is $31,900. So, the net income is $31,900 - $10,700 = $21,200. Starting with the initial contribution of $3,000, add the net income of $21,200, and then subtract the drawings of $12,000. The total owner's equity is $3,000 + $21,200 - $12,000 = $12,200.

Following Is a List of Account Balances (Except for Owner's