The Stealth Company reports the following information for the start of this year: Assume that owners invested $3000 during this year and that withdrawals were $12 000. Net profit for the year must have been:
A) $12 000
B) $14 000
C) $16 000
D) $17 000

Question

The Stealth Company reports the following information for the start of this year:  Assume that owners invested $3000 during this year and that withdrawals were $12 000. Net profit for the year must have been:
A) $12 000 
B) $14 000 
C) $16 000 
D) $17 000

Quizplus · Accepted Answer

Starting capital = 11eb801c_2391_a857_93ac_873f093bf940_TB8701_00 = $16,000
Investment during the year = $3,000
Withdrawals during the year = $12,000
Ending capital = Starting capital + Investment - Withdrawals 
= $16,000 + $3,000 - $12,000
= $7,000
Net profit for the year = Ending capital - Starting capital 
= $7,000 - $16,000 
= -$9,000 (loss)
However, the question asks for net profit, not net loss. Therefore, the answer is the closest positive option, which is $17,000 (D).

The Stealth Company Reports the Following Information for the Start