The following account information is in regard to activity during the month of A
ID: 2408476 • Letter: T
Question
The following account information is in regard to activity during the month of April within the Happy Cat Sushi restaurant located in Atlantic City, New Jersey.
Happy Cat Account Data
Cash
$31,300
Accounts Receivable
$3,000
Truck (Delivery)
$12,000
Supplies
$6,000
Restaurant Revenue
$3,000
M. Xian - Capital (04/01/2010)
$50,000
Gasoline Expense
$700
Utilities Expense
$900
Salary Expense
$4,500
Miscellaneous Expense
$400
Accounts Payable
$5,500
During the month of April, Ms. Xian withdrew $700 to purchase a silver platter for her parent's 50th wedding anniversary and also invested an additional $1,000 in Happy Cat (not reflected in the trial balance presented). What would be Ms. Xian's Owner's Equity balance at the end of April in light of these activities?
$46,500
None of the other answers
$51,700
$50,000
$46,800
Happy Cat Account Data
Cash
$31,300
Accounts Receivable
$3,000
Truck (Delivery)
$12,000
Supplies
$6,000
Restaurant Revenue
$3,000
M. Xian - Capital (04/01/2010)
$50,000
Gasoline Expense
$700
Utilities Expense
$900
Salary Expense
$4,500
Miscellaneous Expense
$400
Accounts Payable
$5,500
Explanation / Answer
For calculation of owners equity balance we need to calculate first we need to calculate net profit or loss from the sales
so to calculate that first we need to deduct all the expenses from sales
Net Profit/ (loss) from slaes= Sales reveune-gas exp-salary exp-utilities exp-miscellaneous exp
=3000-700-4500-900-400
loss=(3500)
As the questions says there have been drawings from the Ms. xian's of $700 that had to be deducted from the owner's equity and Ms. Xian's has also brought back that $1000 thst has not been recoreded that should be added back to owner's equity
therefore the balance in owner's equity will be
=$50000-$700+$1000
=$50300
therefore we need to calculate owner equity at the end of the month therefore we need to transfer the loss from the resturant to the owner's equity therfore the owner's equity balance at the end of the month is
=50300-3500(loss)
=46800*
* the above answer has been calculated assuming that the truck was purchased at the end of the month so no depreciation has been charged