Question

Assets at the beginning of the year 29000 and liabilities 17000. End of year assets 60000 and liabilities 29000. If the owner contributes 5600 and the owner withdraws 37400, how much is the net loss?

a) $16,400
b) $27,100
c) $29,400
d) $38,000

Answer 1

To determine the net loss, we calculated the difference between the owner's equity at the beginning of the year and the adjusted owner's equity at the end, factoring in the owner's withdrawals and contributions. The calculated net loss was $50,800, which does not match any of the provided answer choices, suggesting an error in the question.

Step-by-step explanation:

The goal is to calculate the net loss of a business based on the changes in assets and liabilities and the owner's contributions and withdrawals.

First, we need to determine the owner's equity at the beginning and at the end of the year:

• Owner's equity at the beginning = Assets at the beginning - Liabilities at the beginning
  = $29,000 - $17,000 = $12,000
• Owner's equity at the end = Assets at the end - Liabilities at the end
  = $60,000 - $29,000 = $31,000

Now we consider the owner's contributions and withdrawals:

• Adjusted owner's equity at the end = Owner's equity at the end + Owner's withdrawals - Owner's contributions
  = $31,000 + $37,400 - $5,600

We then calculate the amount:

Adjusted owner's equity at the end = $62,800

Net loss = Adjusted owner's equity at the end - Owner's equity at the beginning
= $12,000 - $62,800 = <$strong>50,800 net loss

However, none of the options given matches the calculated net loss, indicating a potential typo or misunderstanding in the question, as no matching answer choice was provided. Therefore, we must revisit the information provided to ensure accuracy.