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:

Question

Quizplus · Accepted Answer

Since there were no other changes in equity except for the withdrawal of $20,000, the change in owner's capital can be calculated as follows:
Beginning owner's capital = $122,500
Add: Total revenues = $96,000
Less: Total expenses = $85,500
Net income = $10,500
Less: Withdrawals = $20,000
Ending owner's capital = $122,500 + $10,500 - $20,000 = $113,000

Therefore, the change in owner's capital during the year was a decrease of $9,500.

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