Jack Grimes Started a Sole Proprietorship by Depositing $25,000 Cash

question 51

Multiple Choice

Jack Grimes started a sole proprietorship by depositing $25,000 cash in a business checking account. During the accounting period the business borrowed $10,000 from a bank, earned $6,000 of net income, and Grimes withdrew $4,000 cash from the business. Based on this information, at the end of the accounting period Grimes' capital account contained a balance of:

• A)$31,000.
• B)$37,000.
• C)$24,000.
• D)$27,000.

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Definitions:

Essential Terms

Fundamental conditions or clauses in a contract that are critical to its enforcement and interpretation.

Clearly Specified

means stated or described in a manner that leaves no ambiguity regarding the details or requirements.

Past Consideration

Anything given or promised to be given in the past, which cannot be considered valuable in the context of forming a current contract.

Law of Consideration

A principle in contract law that requires an exchange of something of value between the contracting parties.