Scott's Camera Shop started the year with total assets of $80,000 and total liabilities of $40,000. During the year, the business earned revenues of $120,000 and incurred expenses of $70,000. Scott made no additional capital contributions during the year, but did make withdrawals of $60,000. What is the amount of owner's equity at the end of the year?
A)$70,000
B)$120,000
C)$30,000
D)$60,000

Question

Quizplus · Accepted Answer

Owner's equity at the beginning of the year was $40,000 ($80,000 - $40,000).
Revenue of $120,000 - Expenses of $70,000 = Net income of $50,000.
Owner's equity at the end of the year = Beginning owner's equity + Net income - Owner's withdrawals
= $40,000 + $50,000 - $60,000
= $30,000

Scott's Camera Shop Started the Year with Total Assets of $80,000