Murray Kiser operates his own catering service. Summary financial data for Febru

Question

Murray Kiser operates his own catering service. Summary financial data for February are presented in wquation form as follows. Each line designated by a number indicates the effect of a transaction on the equation. Each increase and decrease in owner's eauity. except transaction(5), affects net income.

1.What is the amount of net decrease in cash during the month?

2.What is the amount of net increase in owner's equity during the month?

3.What is the amount of the net income for the month?

4. How much of the net income for the month was retained in the business?

Explanation / Answer

1) Net decrease in cash is 30,000 - 14,800 = 15,200 2) Opening owners equity is $101,000 Closing Owners equity = (101k -2k + 35k - 29k) = 105,000 Therefore the increase is 105 - 101 = 4,000 3) Net income is = Fees earned - expenses = 35,000 - 26,000 - 3,000 = 6,000 4) There is 6,000 in net income of which 2,000 is drawn out (transaction 5) - so there is $4,000 left for the business

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