The adjusted balances for Windsor Co. are listed below.
Cash, $10,000
Accounts Receivable, $1,250
Prepaid Insurance, $1,750
Equipment, $7,500
Accumulated Depreciation, $1,000
Accounts Payable, $2,000
T. Windsor, Capital, $15,000
J. Windsor, Drawing, $5,000
Income from Services, $17,500
Wages Expense, $6,000
Rent Expense, $4,000

After recording the closing entries, what would be the balance of the capital account?
A) $35,000
B) $12,500
C) $17,500
D) $10,000

Question

The adjusted balances for Windsor Co. are listed below. ​
Cash, $10,000
Accounts Receivable, $1,250
Prepaid Insurance, $1,750
Equipment, $7,500
Accumulated Depreciation, $1,000
Accounts Payable, $2,000
T. Windsor, Capital, $15,000
J. Windsor, Drawing, $5,000
Income from Services, $17,500
Wages Expense, $6,000
Rent Expense, $4,000
​
After recording the closing entries, what would be the balance of the capital account?
A) $35,000
B) $12,500
C) $17,500
D) $10,000

Quizplus · Accepted Answer

The capital account balance is the beginning capital plus the net income minus the drawings. The net income is the income from services minus the expenses. The beginning capital is $15,000. The net income is $17,500 - $6,000 - $4,000 = $7,500. The drawings are $5,000. So, the capital account balance is $15,000 + $7,500 - $5,000 = $17,500.

The Adjusted Balances for Windsor Co