Z Company reports the following balance sheet information for 2011: $$\begin{array} { l c c }
& \text { 1 January 2011 } & \text { 31 December 2011 } \
\text { Assets } & \$ 60,000 & \$ 70,000 \
\text { Liabilities } & \$ 12,000 & \$ 14,000
\end{array}$$ Assuming the capital contribution made by the owners during 2011 was $3000 and withdrawals were $12 000,profit for 2011 must have been:

Question

Z Company reports the following balance sheet information for 2011: $$\begin{array} { l c c } 
& \text { 1 January 2011 } & \text { 31 December 2011 } \
\text { Assets } & \$ 60,000 & \$ 70,000 \
\text { Liabilities } & \$ 12,000 & \$ 14,000
\end{array}$$ Assuming the capital contribution made by the owners during 2011 was $3000 and withdrawals were $12 000,profit for 2011 must have been:

Quizplus · Accepted Answer

Explanation:The accounting equation is: Assets = Liabilities + Owner's Equity. Owner's Equity is the difference between Assets and Liabilities. The change in Owner's Equity is the difference between the beginning and ending Owner's Equity. The change in Owner's Equity is equal to the profit for the period plus the capital contribution minus the withdrawals. Therefore, the profit for 2011 is: $70,000 - $14,000 - $3,000 + $12,000 = $17,000.

Z Company Reports the Following Balance Sheet Information for 2011