Question

In: Economics

At the beginning of the year, Sigma Company's balance sheet reported Total Assets of $204,000 and...

At the beginning of the year, Sigma Company's balance sheet reported Total Assets of $204,000 and Total Liabilities of $78,500. During the year, the company reported total revenues of $237,000 and expenses of $183,500. Also, owner withdrawals during the year totaled $50,000. Assuming no other changes to owner's capital, the balance in the owner's capital account at the end of the year would be:

Multiple Choice

$176,000.

$129,000.

$201,500.

$123,000.

$126,000.

Expert Solution

ANSWER-

Always the total assets is equal to total liabilities plus equity.

Given in question total assets = $204,000 and Total Liabilities = $78,500

Therefore, total assets = total liabilities + equity

$204,000 = $78,500 + equity

Equity = $204,000 - $78,500 = $125,500.

Equity includes Capital, revenue and retained earnings minus dividend.

Given in question total revenue = $237,000

Adding total revenue to equity we get total equity which is,

Total equity = $125,500 + $237,000 = $362,500

To know the balance in the owner's capital account at the end of the year we will subtract total expenses and withdrawals from total equity,

Total expenses = $183,500 and withdrawals = $50,000

Balance in owers capital = $362,500 - $183500 - $50,000 = $ 129,000

Hence, the balance in the owner's capital account at the end of the year is $129,000.

So, the answer is 2nd option $129,000

Rahul Sunny answered 3 years ago

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