I need to figure net income/loss using a T account. How do I do this?
The question states "If the owner's euity as of Jan 1, 1985 was $2000 and if J. Small made no investments and received no withdrawals during the year, determine the net income or net loss for the year ended Dec 31, 1985." On the balance sheet provided with this example, it shows he had a $200 in Accounts Payable, and his OE was $3200.
When I try to figure this on my own using a T account, I come up with the net income of $1800. I got this by taking the $2000 in his Capital account less the $200 in Accounts Payable. Is this correct? If not, where did I do my calculations wrong?