Question

Using the income statement for Sentinel Travel Service shown in Practice Exercise 1-4B, prepare a statement of owner’s equity for the current year ended August 31, 2014. Barb Schroeder, the owner, invested an additional $36,000 in the business during the year and withdrew cash of $18,000 for personal use. Barb Schroeder, capital as of September 1, 2013, was $380,000.

Answer 1

Answer:

Explanation:

The computation of owner equity for the current year is shown below:

= Capital as of September 2013 1 + Additional investment - drawings

where,

September capital is $380,000

Additional investment is $36,000

And, the drawings is $18,000

Now put these values to the above formula

= $380,000 + $36,000 - $18,000

= $398,000

Here, drawings means the cash which is withdrawn for personal use.

The statement of owner equity is given in the attachment.