At the beginning of the year, Beta Company's balance sheet reported Total Assets of $195,000 and Total Liabilities of $75,000. During the year, the company reported total revenues of $226,000 and expenses of $175,000. Also, owner withdrawals during the year totaled $48,000. Assuming no other changes to owner's capital, the balance in the owner's capital account at the end of the year would be:
A) $174,000.
B) $78,000.
C) cannot be determined from the information provided.
D) $120,000.
E) $123,000.

Question

Quizplus · Accepted Answer

The change in owner's capital during the year can be calculated using the following formula: Change in Owner's Capital = Revenues - Expenses - Owner Withdrawals. 
Substituting the values given: 
Change in Owner's Capital = $226,000 - $175,000 - $48,000 = $3,000 
Since there were no other changes to owner's capital, the ending balance in the owner's capital account can be calculated as: 
Ending Owner's Capital = Beginning Owner's Capital + Change in Owner's Capital 
= $195,000 - $75,000 + $3,000 = $123,000. 
Therefore, the answer is E.

At the Beginning of the Year, Beta Company's Balance Sheet