Question

You are preparing a statement of owner's equity for Johnson Motor Company. You have the following information: Beginning capital is $36,000, Net Income for the year is $14,000 and Drawing for the year is $6,600. Calculate the ending capital amount.

Answer 1

Answer:

$43,400

Explanation:

Remember that:

Closing Equity = Opening Equity + (Revenue - Expense) - Drawings

Now here we have opening equity of $36,000, Net Income which is equal to the difference of Revenue and expenses of $14,000 and drawings of $6,600.

So by putting values, we have:

Closing Equity = $36,000 + $14,000 - $6,600 = $43,400