Question

If net income is $2,600 and owner withdrawals are $7,300, how much did the owner contribute (owner, capital)?

Owner, Capital

Answer 1

The answer is: $4,700

Step-by-step explanation:

In this question we need to use the accounting equation to solve the problem:

Accounting Equation:

Assets = Liabilities + Owner's Equity

Owner's Equity = Owner, Capital + Net Income - Owner Withdrawals

Now we solve:

Net Income is: $2,600

The owner's Withdrawals are: $7,300

Now, we can use the accounting equation to get:

Owner, Capital = Assets - Liabilities - Net income + Owner Withdrawals

However, there is no information about assets and liabilities, we can assume that they are equal to Zero(0).

Hence, Owner, capital = 0 - 0 - 2,600 + 7,300 = 4,700

= 0 - 2,600 + 7,300

= -2,600 + 7,300

= $4,700

Draw Conclusion:

The answer is: $4,700

Hope this helps!