Expanded Owner`s Equity on balance sheet

Report
5.3 Expanded Owner’s Equity Section
of the Balance Sheet
Expanding the Owner’s Equity (OE)
section of the balance sheet:
1.
Income
Statement
Trial
Balance
NET INCOME > DRAWINGS = INCREASE IN CAPITAL
E. Boa, Capital, June 1
12 276.53
Net Income
+ 1 709.07
Drawings
- 1 500.00
Increase in Capital
209.07
E. Boa, Capital, June 30
12 485.60
2.
NET INCOME < DRAWINGS = DECREASE IN CAPITAL
E. Boa, Capital, January 1
2 0376.64
Net Income
+ 10 594.03
- 15 376.70
Drawings
Decrease in Capital
4 782.67
E. Boa, Capital, December 31
15 593.97
3.
NET LOSS + DRAWINGS = DECREASE IN CAPITAL
E. Boa, Capital, January 1
31 216.40
Net Loss
- 5 147.62
ADD
- 19 400.00
Drawings
Decrease in Capital
24 547.62
E. Boa, Capital, June 30
6 668.78
Account Form Balance Sheet –
Horizontal
Report Form Balance Sheet - Vertical
Liabilities +
Owner’s Equity
1) Despite drawings of $2 000 in the first 6 months of
2012, and a net income of $3 200, “Bright Stop Ltd.” was
still in good shape at the end of June. The year had opened
boasting a capital account of $39 000
Beginning
Bright Stop Ltd., Capital, Jan. 1
39 000
Net Income
3 200
Drawings
2 000
Increase in Capital
1 200
Bright Stop Ltd., Capital, June 30
Ending Capital
Capital
40 200
2) Ms. S Henessey invested $13 000 in her new business
of “Wicher Imports” September 1, 2012. After 3 months of
operation her accountant advised her that she had
withdrawn $4 800 and earned a net income of $2 400.
S. Henessey, Capital, Sept. 1
Net Income
Drawings
Decrease in Capital
S. Henessey, Capital, Dec. 1
13 000
2 400
4 800
2 400
10 600
3) The experimental self service drycleaning operation run
by one of the Markus Brothers proved unsuccessful in the
trial year. “Markus Cleaners” showed a net loss of $3 300
despite the enthusiastic initial capital investment of $20
000. A mere $1 300 in drawings had been made during
the year.
Markus Bros., Capital, Jan. 1
Net Loss
3 300
Drawings
1 300
Decrease in Capital
Markus Bros., Capital, Dec 31.
20 000
4 600
15 400
Complete the following exercises:
Do you have the following done?
 Read 5.1 & answer review questions
#1,2,6,9,10,11,18 p. 140 (t), p. 78 (w)
 Section 5.1 Ex. #1, 2, 3 p. 141-142 (t), p.
80-81 (w)
 Section 5.2 Ex. 1,2, 4, 5 p. 150-152 (t), p.
86-90 (w)
Today:
 Section 5.3 Ex. 1, 2, 3 p. 157 (t), p. 9192(w)

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