Question

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 $8000. If El Centro's ending owner's equity was
$112000, what was the company's revenue for the year?

Answer 1

Based on the accounting equation, El Centro Company's revenue for the year was calculated to be $168,000 after accounting for owner's equity, investments, expenses, and drawings.

Step-by-step explanation:

The question asks us to determine the revenue for the year for El Centro Company, based on changes in owner's equity and specific financial transactions. To calculate the revenue, we'll use the basic accounting equation for owner's equity, which shows the relationship between owner's equity, investments by the owner, revenues, expenses, and drawings. The equation is as follows: Beginning Owner's Equity + Additional Investments + Revenue - Expenses - Drawings = Ending Owner's Equity.

Using the figures provided:

• Beginning Owner's Equity = $30,000
• Additional Investments = $42,000
• Expenses = $120,000
• Drawings = $8,000
• Ending Owner's Equity = $112,000

We are solving for Revenue:

$30,000 + $42,000 + Revenue - $120,000 - $8,000 = $112,000

When we rearrange the equation and solve for revenue:

Revenue = $112,000 + $120,000 + $8,000 - $30,000 - $42,000

Revenue = $168,000

Therefore, El Centro Company's revenue for the year was $168,000.

Answer 2

$168,000

Step-by-step explanation:

Equity = Assets - liabilities.

In the case of El Centro, the increase in equity will be a result of profits or losses realized in the year. Since equity increased to $112,000, then revenue for the period will be determined as follows.

$112,000 = (30,000 + 42,000)( equity) + revenue -( 120,000+ 8,000) expenses

$112,000 = $72,000 + revenue - $128,000

$112,000 = -56,000 + revenue

Revenue = 112,000 + 56,000

Revenue =$168,000