On January 2, Smith purchased the net assets of Jones' Cleaning, a sole proprietorship, for $350,000, and commenced operations of Spiffy Cleaning, a sole proprietorship. The assets had a carrying amount of $375,000 and a market value of $360,000. In Spiffy's cash- basis financial statements for the year ended December 31, Spiffy reported revenues in excess of expenses of $60,000. Smith's drawings during the year were $20,000. In Spiffy's financial statements, what amount should be reported as Capital-Smith? A. $400,000 B. $415,000 C. $410,000 D. $390,000 Explanation Choice "D" is correct, $390,000 Capital-Smith at December 31. Balance, January 2 $350,000 Revenues in excess of expenses 60,000 Drawings (20,000) Balance, December 31 $390,000