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owner's equity

Asked Aug 26, 2006, 08:05 AM — 1 Answer
I have to do t-accounts, trial balance,income statement, owner's equity and a balance sheet on an example the teacher gave us. I completed the t-accounts and the trial balance. They are correct, but, I am stubled on the income statement and the owner's equity. I don't know how to figure if it was a loss or a profit that was gained. I don't know how to figure out the owner's equity

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CaptainForest Posts: 3,684, Reputation: 2085
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Aug 26, 2006, 12:26 PM
Quote:
Originally Posted by liz445
I don't know how to figure if it was a loss or a profit that was gained. I don't know how to figure out the owner's equity
How to figure out if it was a loss or profit:

Example:
Sales Revenue 100,000
Less: Sales Returns 700
Less: Sales Discount 300

Net Revenue = 99,000

Cost of Goods Sold 30,000

Gross Profit 69,000

Less: Expenses (such as Advertising, Utilities, etc.) Lets sat the total is 10,000

Net Income 59,000


How to figure out owners equity?
Your OE should have a credit balance (lets say it is $50,000)

OE, beginning 50,000
Add: Net Income of 59,000 (or subtract a net loss)
Less: Any Drawings taken out by the owner during the year.
Add: Any addition capital that might have been invested during the year

OE, closing is the sum of all those parts.
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