Question

1. mr. douglas invested $25,000 cash in the business.

2. purchased equipment worth $7,000 with a $500 down payment. the remainder is due in 30 days.
3. paid $900 cash for a six-month insurance policy.
4. received $3,000 cash from customers for services rendered.
5. paid wages, $1,750.
6. received and paid advertising bill of $100.
7. performed services worth $2,500 for credit customers.
8. received $1,700 cash from customers previously billed on account.
9. mr. douglas withdrew $5,300 cash for personal use.
What is the total owner's equity after the 10th transaction?
A) $23,450
B) $25,850
C) $23,150
D) $27,150

Answer 1

The total owner's equity after the 10th transaction is $23,650. None of the above options are correct.

Step-by-step explanation:

To calculate the total owner's equity after the 10th transaction, we need to consider all the transactions that affected the owner's equity.

1. The initial investment of $25,000 cash increases the owner's equity.
2. Purchasing equipment worth $7,000 with a down payment of $500 and the remainder due in 30 days does not affect the owner's equity directly.
3. Paying $900 cash for a six-month insurance policy does not affect the owner's equity directly.
4. Receiving $3,000 cash from customers for services rendered increases the owner's equity.
5. Paying wages of $1,750 decreases the owner's equity.
6. Receiving and paying an advertising bill of $100 does not affect the owner's equity directly.
7. Performing services worth $2,500 for credit customers does not affect the owner's equity directly.
8. Receiving $1,700 cash from customers previously billed on account increases the owner's equity.
9. Withdrawing $5,300 cash for personal use decreases the owner's equity.

To calculate the total owner's equity, we can add the amounts that increased the owner's equity and subtract the amounts that decreased the owner's equity. Starting with the initial investment of $25,000, we can calculate:

Owner's equity = $25,000 + $3,000 + $1,700 - $1,750 - $5,300 = $23,650

Therefore, the total owner's equity after the 10th transaction is $23,650.