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a.net loss of $35,000
b.net income of $35,000
c.net income of $14,000
d.net loss of $14,000
B) Net income $35000.
Opening capital $25000
Net income. $35000
Drawing. ($23000)
Closing capital. $37000
b.net income of $35,000------------------------
Ending Capital = Opening capital - withdrawal + Net Income
37 K =25 K -23 K + NI
NI =35 K
Answer : B
Option (B) Net Income of $35,000..............!!!
The Option B is correct for this question but it should be assume that the owner didn't invested more capital during the year. As the capital shows ending Capital amount. Means there should be no confusions in the question. It should be clear, transparent and easy.
Since capitalization was increased by 12,000 despite of 23,000 drawing, we can assume that there was increased in earning or income. Therefore, it is safe to say a net income by 35,000.
net income of $35,000........................
Correct Answer is B.net income of $35,000
In this case considering all options, Correct Answer is B
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