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View Full Version : How to calculate equity at the end of the year


bmean
Sep 14, 2012, 05:04 PM
Please help someone. How do I find the equity with this information?

At the beginning of the year a sole trader had Assets of $40,000 and Owner’s Equity of $15,000. During the year, the business made a profit $2,000. Also, the owner invested $6,000 and withdrew $6,000 for personal use. During the year Assets increased by $14,000. What was the Owner's Equity at the end of the year?

paraclete
Sep 15, 2012, 03:05 AM
I'm sure you have heard that opening balance plus earnings and new capital less dividends and drawings equals closing balance. What the point of converting an investment into drawings is escapes me but then there you are, I'm not a student