Question

In: Accounting

if a company had beginning owner's capital of $400,000, ending owner's capital of $600,000, sales of...

if a company had beginning owner's capital of $400,000, ending owner's capital of $600,000, sales of $1,000,000, owner's drawings of 100,000, what were its expenses during the year.

Solutions

Expert Solution

  • We know that Beginning Capital balance + Net Income – Drawings = Ending Capital balance
  • We can use this equation find the value of Expenses
  • Original Equation

Owner's Capital Beginning Balance

+

Sales revenues

-

Expenses

-

Drawings

=

Owner's Capital Ending Balance

  • Equation derived from above to find the value of EXPENSES

Owner's Capital Beginning Balance

+

Sales revenues

-

Owner's Capital Ending Balance

-

Drawings

=

Expenses

  • Calculation for ‘Expenses’

Owner's Capital Beginning Balance

+

Sales revenues

-

Owner's Capital Ending Balance

-

Drawings

=

Expenses

$          400,000.00

+

$     1,000,000.00

-

$          600,000.00

-

$            100,000.00

Expenses

$                                                                                                                                                                                                                                                  700,000.00

Expenses

  • Answer: Expenses were $ 700,000 during the year

ekkarill92 answered 2 years ago
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