Question

Statement of owner's equity

A-One Travel Service is owned and operated by Kate Duffner. The revenues and expenses of A-One Travel Service for the year ended August 31, 20Y6, follow:
Account Amount
Fees earned $1,150,000
Office expense 150,000
Miscellaneous expense 45,000
Wages expense 640,000
During the year, Kate Duffner invested an additional $15,000 in the business and $50,000 was withdrawn for personal use. Kate Duffner, Capital had a balance of $835,000 as of September 1, 20Y5.
Prepare a statement of owner's equity for the year ended August 31, 20Y6.
A-One Travel Service
Statement of Owner's Equity
For the Year Ended August 31, 20Y6
Line Item Description Amount

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Answer 1

The owner's equity for the year ended August 31, 20Y6, is $1,115,000.

Owner's equity is also known as shareholder's equity or net assets. It represents residual interest in the assets of an entity after deducting its liabilities and reflects the owner's ownership stake in the business.

To prepare the Owner's equity, we need the net income from the income statement.

Net Income = Fees earned - Office expense - Miscellaneous expense - Wages expense

= $1,150,000 - $150,000 - $45,000 - $640,000

= $315,000

Statement of Owners' Equity

For the year ended August 31, 20Y6

Particulars Amount ($)

Beginning Balance $835,000

Add: Additional investment $15,000

Net income $315,000

$330,000

Less: Drawings -$50,000

Ending balance $1,115,000

Therefore, the owner's equity for the year ended August 31, 20Y6, is $1,115,000.