Question

Ferris Wheeler is a trader in entertainment services. The business reported a net loss of $18,800 for the year 2012. At the start of the year the owners’ equity was $378,800, and at the end of the year the equity was $330,000. During the year the owner took goods valued at $10,000 as well as cash for personal use.

What is the amount of cash drawings for the year?

Answer 1

Answer: $20000

Explanation:

The amount of cash drawings for the year will be calculated thus:

Net loss = $18,800

Beginning owner's equity = $378,800

Ending owner's equity = $330,000

Goods withdrazwn by owner = $10,000

The Ending owner's equity is calculated as:

= Beginning owner's equity - Net loss - Goods withdrazwn by owner - Cash withdrawn by owner

We'll then slot in the values given and this will be:

330,000 = 378,800 - 18,800 - 10,000 - Cash withdrawn by owner

330,000 = 350,000 - Cash withdrawn by owner

Cash withdrawn by owner will the be:

= $350000 - $330000

= $20,000