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Using the income statement for Sentinel Travel Service shown in Practice Exercise 1-4B, prepare a statement of owner’s equity for the year ended August 31, 2016. 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, 2015, was $380,000.

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Financial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781305088436

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BuyFindarrow_forward

Financial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781305088436
Chapter 1, Problem 5PEB
Textbook Problem
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Using the income statement for Sentinel Travel Service shown in Practice Exercise 1-4B, prepare a statement of owner’s equity for the year ended August 31, 2016. 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, 2015, was $380,000.

To determine

Prepare statement of Owners’ Equity of ST Service for the year ended August 31, 2016

Explanation of Solution

Statement of owners’ equity:  This statement reports the beginning owner’s equity and all the changes which led to ending owners’ equity. Additional capital, net income from income statement is added to and drawings are deducted from beginning owner’s equity to arrive at the end result, ending owner’s equity.

Prepare statement of owners’ equity of ST Service for the year ended August 31, 2016.

ST Service
Statement of Owners’ Equity
For the Year Ended August 31, 2016
BS capital, September 1, 2015 $380,000
Additional investment by owner$36,000 
Net loss for the year(7,000) 
Withdrawals(18,000) 
Increase in owners’ equity 11,000
BS capital, August 31, 2016 $391,000

Table (1)

Working Notes: Prepare income statement for ST Service for the year ended August 31, 2016...

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Financial Accounting
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