If equity at the beginning of the period is $35,000 and at the end of the period is $56,000, and $20,000 is withdrawn by the owner during the period, calculate profit. (Use the stock approach.)
A) $1,000
B) $21,000
C) $41,000
D) $76,000

Question

Quizplus · Accepted Answer

The profit can be calculated using the formula: Ending Equity = Beginning Equity + Profit - Withdrawals. Rearranging the formula to solve for profit gives: Profit = Ending Equity - Beginning Equity + Withdrawals. Substituting the given values: Profit = $56,000 - $35,000 + $20,000 = $41,000.

If Equity at the Beginning of the Period Is $35,000