At the beginning of the year, sigma 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:

The answer is: Equity at the end of the year will be $123,000

Explanation:

At the beginning of the year the balance sheet was as following:

assets $195,000                   liabilities $75,000

                                              equity $ 120,000

Then during the year the income statement is:

If the owners withdrew $48,000, then cash and equity will decrease.

The ending balance for the year:

assets $195,000 + $51,000          liabilities $75,000

           -$48,000 =                         equity $120,000 + $51,000 - $48,000 =

           $198,000                                       $123,000

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