Question

Below is a random list of account balances as at 30 June 2016, the end of the business' first year of operations. Prepare a trial balance in the correct order) on paper and then answer the following questions. The owner, Michael Mower, invested $22,600 at the beginning of the year and withdrew $5,000 during the year for personal use. Accounts 25000 Receivable Accounts payable 3500 Salary 4500 Expense Repairs Expense 800 Truck 8500 Equipment 6300 Notes 8200 Payable Cash 6800 Supplies 1600 Expense Fuel 800 Expenses Service 22800 Revenue Salary 2200 Payable Refer to the Trial Balance that you have prepared. The profit or loss for the year was: Select one: O a. $7,700 b. $15,100 C. $12,800 d. $5,900

Answer 1

1) Calculate profit and loss

Service revenue	22800
Salary expense	-4500
Repairs expense	-800
Supplies expense	-1600
Fuel expense	-800
Profit and loss	15100

So answer is b) $15100

2) Calculate total assets

Account receivable	25000
Truck	8500
Equipment	6300
Cash	6800
Total Assets	46600

So answer is a) $46600

3) Ending owner's equity

Beginning owner's equity	22600
Add: Profit and loss	15100
Less: Withdraw	-5000
Ending owner's equity	32700

So answer is b) $32700

4) Statement of owner's equity show balance of 32700

So answer is a) $32700

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