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A merchandiser uses a perpetual inventory system
A merchandiser uses a perpetual inventory system. The beginning Owner, Capital balance of the merchandiser was $130,000. During the year, Sales Revenue amounted to $85,000, Cost of Goods Sold was $40,000, and all other expenses totaled $12,000. Owner withdrawals were $25,000. There were no new capital contributions during the year.
The ending balance of Owner, Capital would be:
a. $130,000.
b. $163,000.
c. $188,000.
d. $138,000.
Expert Solution
Answer: d. $138,000.
The ending balance of Owner, Capital would be computed as follows:
| Owner, Capital beginning | $130,000 |
| Add: Net income | |
| Sales | $85,000 |
| Less: Cost of goods sold | 40,000 |
| Less: Other expenses | 12,000 |
| Net income | $33,000 |
| Less: Owner withdrawals | $25,000 |
| Owner, Capital ending | $138,000 |
|---|
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