Question

Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103,700, and withdrew $18,000 from the business during the current year. The owner's capital account before closing had a balance of $297,000. The ending owner's capital balance after closing is:

Answer 1

The ending owner's capital balance after closing is $360,300

Step-by-step explanation:

For computing the ending balance of owner capital, we need to apply the formula which is shown below:

= Beginning balance of owner capital + net profit - withdrawn amount

= $297,000 + $81,300 - $18,000

= $360,300

The net profit equals to

= Revenue - expenses

= $185,000 - $103,700

= $81,300

This net income or net loss would reflect in the statement of the retained earning account.