Andrea Conaway opened Wonderland Photography on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books: Conaway invested $13,500 cash in the business.
2) Conaway contributed $20,000 of photography equipment to the business.
3) The company paid $2,100 cash for an insurance policy covering the next 24 months.
4) The company received $5,700 cash for services provided during January.
5) The company purchased $6,200 of office equipment on credit.
6) The company provided $2,750 of services to customers on account.
7) The company paid cash of $1,500 for monthly rent.
8) The company paid $3,100 on the office equipment purchased in transaction #5 above.
9) Paid $275 cash for January utilities.
Based on this information, the balance in the Andrea Conaway, Capital account reported on the Statement of Owner's Equity at the end of the month would be:
A) $31,400.
B) $39,200.
C) $31,150.
D) $40,175.
E) $30,875.

Question

Quizplus · Accepted Answer

- Starting capital: $13,500 cash + $20,000 photography equipment = $33,500
- Revenue: $5,700
- Expenses: $2,100 insurance + $6,200 office equipment + $1,500 rent + $3,100 office equipment payment + $275 utilities = $13,175
- Net income: $5,700 - $13,175 = -$7,475
- Ending capital: $33,500 + (-$7,475) = $26,025
- However, there is no mention of the $2,750 in accounts receivable, which means that it has not yet been collected and therefore should not be included in the ending capital calculation. 
- Therefore, the actual ending capital would be: $26,025 - $2,750 = $23,275 
- This amount would be reported on the Statement of Owner's Equity as the ending balance in the Andrea Conaway, Capital account.

Thus, the best answer is D) $40,175.

Andrea Conaway Opened Wonderland Photography on January 1 of the Current