How Much Did John Sheridan Withdraw From His Business?

Question:

Considering the financial data provided, how much did John Sheridan, the owner, withdraw from the business?

Options:

$4800

$28200

$53500

$25300

Answer:

The owner, John Sheridan, withdrew $28,200 from the business based on the changes in owner's equity.

To calculate the amount withdrawn by the owner, we need to consider the changes in the owner's equity during the year. The owner's equity can be calculated by subtracting total liabilities from total assets, which gives us $33,000 ($84,900 - $51,900) at the beginning of the year.

During the year, the business recorded $149,000 in service revenues and $95,500 in expenses. The net income can be calculated by subtracting expenses from revenues, which gives us $53,500 ($149,000 - $95,500). Net income increases the owner's equity.

At the end of the year, the owner's equity is given as $58,300. To calculate the owner's withdrawals, we need to determine the change in owner's equity. The change in owner's equity is the difference between the ending equity and the net income, which is $4,800 ($58,300 - $53,500).

Therefore, the owner, John Sheridan, withdrew $28,200 ($4,800 + $23,400) from the business.