Question

Net income is $29,000. Beginning capital balance was $34,000. Ending capital balance was $55,000. No capital contributions were made by the owner during the year. What amount of drawings was made?

Answer 1

$8000

Step-by-step explanation:

The net income increases the capital balance while drawings reduces the balance.

The movement in the capital balance for the year is so determined as the net movement in net income and drawings.

As such,

Beginning capital balance + Net income - drawings = closing capital balance

$34,000 + $29,000 - drawings = $55,000

Drawings = $34,000 + $29,000 - $55,000

= $8000

Amount of drawings was made was $8000