Asked by Yvette Umutoni Umutoni on Jun 17, 2024
Verified
El Centro Company began the year with owner's equity of $30000. During the year El Centro received additional owner investments of $42000 recorded expenses of $120000 and had owner drawings of $12000. If El Centro's ending owner's equity was $112000 what was the company's revenue for the year?
A) $164000.
B) $172000.
C) $202000.
D) $214000.
Owner's Equity
The residual interest in the assets of the entity after deducting liabilities.
Owner Investments
Funds or assets introduced by the owner(s) into the business to provide financial resources for operations or expansion.
Revenues
The total income generated from sales of goods or services before any expenses are deducted.
- Appraise the owner’s equity interest, pondering elements like attainable profits, investments from personal funds, and drawings by the owner.
- Derive the net financial gain by resolving the discrepancy between income and expenditures.
Verified Answer
KN
Kinsey NyahozaJun 18, 2024
Final Answer :
B
Explanation :
The company's revenue can be calculated using the formula for changes in owner's equity: Ending Owner's Equity = Beginning Owner's Equity + Owner Investments + Revenue - Expenses - Owner Drawings. Plugging in the given values: $112,000 = $30,000 + $42,000 + Revenue - $120,000 - $12,000. Solving for Revenue gives $172,000.
Learning Objectives
- Appraise the owner’s equity interest, pondering elements like attainable profits, investments from personal funds, and drawings by the owner.
- Derive the net financial gain by resolving the discrepancy between income and expenditures.
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