During 2015, the assets of Hilyer's Crematorium rose by $47,000 and its liabilities rose by $40,000. No additional investments were made. Assuming net income for the period is $12,000, what was the amount of withdrawals in 2015? I feel like I'm missing some needed info (beginning balances), maybe not. Thanks in advance
To determine the amount of withdrawals in 2015, we need to consider the changes in assets, liabilities, net income, and any additional investments. However, since no information is provided about the beginning balances or additional investments, we can only calculate the withdrawals if we assume that the change in owner's equity equals the net income.
In this case, owner's equity can be calculated as the difference between assets and liabilities:
Owner's Equity = Assets - Liabilities
To calculate the change in owner's equity, we subtract the beginning owner's equity from the ending owner's equity:
Change in Owner's Equity = Ending Owner's Equity - Beginning Owner's Equity
Since no additional investments were made, we can assume that the change in owner's equity is equal to the net income:
Change in Owner's Equity = Net Income
Given that the net income is $12,000, we can now calculate the ending owner's equity:
Ending Owner's Equity = Beginning Owner's Equity + Net Income
To determine the amount of withdrawals, we subtract the change in owner's equity from the net increase in liabilities:
Withdrawals = Change in Owner's Equity - Net Increase in Liabilities
However, without information on the net increase in liabilities, we cannot determine the exact amount of withdrawals in 2015. Please note that this answer is based on the assumption that the change in owner's equity matches the net income.