Question

Determine the net income. The owner's equity at the beginning of the period is $20,000. The owner made cash withdrawals that total $7,000. At the end of the period the owner's equity is $37,000.

Answer 1

The equation of owners equity is revenue minus expenses. So basically in this question,
(Owner’s Equity at the beginning of the period) $20,000 + (Revenue/Net income) $* - (Drawings/Cash Withdrawal) $7,000 = (Owner’s Equity at the end of period) $37,000

Using the above formula, solving gives, Net Income: $24,000

Answer 2

Based on the information given the net income is $24,000.

First step is to calculate the  increase in equity

Increase in equity=Beginning Owner  equity-Ending Owner equity

Increase in equity=$20,000-$37,000

Increase in equity=$17,000

Second step is to calculate the net income using this formula

Net income=Increase in equity- Cash

Where:

Increase in equity=-$17,000

Cash=$7,000

Let plug in the formula

Net income=-$17,000-$7,000

Net income=$24,000

Inconclusion the net income is $24,000.

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