Question

During its first year of operations, Mario Lupo personally invested $15,000 in his business, Lupo Company. Mario withdrew $2,000 for personal use. Lupo company earned $35,000 of revenues and incurred $23,000 of expenses. At the end of the year, Lupo Company's equity totaled:

Answer 1

$27,000

Step-by-step explanation:

The total equity of a company is the amount of investment made in the company including the income realised during the course of the year.

If any dividened amount is paid during the year or money is withdrawn for personal use during the year, such amount is deductd before having the ending shareholder's equity.

Ending shareholder's equity= Amount invested + Net income - Dividend or Money withdrawn for personal money

= $15,000 + ($35,000 - $23,000) -$2,000

= $27,000.

The Lupo company's total equity is therefore

$27,000