Question

Equity: Assets & Liabilities: $ 11,000 Owner contribution Beginning: 8,000 $ 67,000 Owner withdrawal Assets 205,000 Revenues 11,000 Liabilities Expenses Ending: $ 46,000 Assets Liabilities 34,000 Requirements: R1. Compute the missing amount for Felix Company. You will need to work through owner's equity. R2. Did Felix earn a net income or suffer a net loss for the year? Compute the amount.

Answer 1

1) Solution: Expenses equals $252,000

Working:

	Assets	-	Liabilities	=	Equity
Beginning	67,000	-	11,000	=	56,000
Ending	46,000	-	34,000	=	12,000

Capital, Beginning balance	56,000
Plus: Contribution by the owner	11,000
Plus: Revenues	205,000
Less: Expenses	-252,000
Less: Owner withdrawals	-8,000
Capital, Ending balance	12,000

　

2) Net income/ loss = Revenues - Expenses

Net income/ loss = 205,000 - 252,000 = 47,000