[Ms10]

Hello,
I hope someone can help... I am stuck


A business had the following amounts of assets and liabilities at the beginning and end of a recent year:

Assets Liabilities
Beginning of the year $94,000 $43,000
End of the year 133,000 63,000

Determine the net income earned or net loss incurred by the business during the year under each of the following unrelated assumptions:

a. The owner made no additional investments in the business and withdrew no assets during the year.


b. The owner made no additional investments in the business during the year but withdrew $5,350 per month to pay personal living expenses.


c. The owner withdrew no assets during the year but invested an additional $92,000 cash.


d. The owner withdrew $4,700 per month to pay personal living expenses and invested an additional $87,000 cash in the business.

Thanks,

[pready]

First you have to find the beginning of the year Equity. The basic accounting equation is: Assets = Liabilities + Owners Equity which can be rewritten as: Owners Equity = Assets - Liabilities. So take your beginning year assets - beginning year liabilities to get your beginning year owners equity.

Now you can use the changes in equity formula to find your missing net income. The expanded equation for changes in equity is: Ending Equity = Beginning Equity + Net Income (Revenues - Expenses) + Investments - Withdrawals (Dividends) which can be rewritten as:
Net Income = Ending Equity - Beginning Equity - Investments + Withdrawals

[Ms10]

Thanks pready,

this was a great help... I am sure I solved all the questions... :):)