Answer to Question #149454 in Accounting for Salima Calapatan

Question

Statement of Changes in Equity

Problem 1: Sole Proprietorship

On February 15,20x1, Evelyn Ferrer opened Cookie Fantasy Bakeshop. She invested 75,000 to purchase an oven and bakery supplies. The business generated a net income of 37,545 in 20x1. Moreover, Evelyn used 15,000 from account of Cookie Fantasy to pay the electricity and phone bills of her house.

Evelyn invested an additional 13,400 and 17,650 on March 16, 20x2 and August 19, 20x2, respectively. Net income for 20x2 was reported at 48,950. Evelyn's Drawings account has a balance of 20000 on December 31, 20<2.

Required: Prepare Cookie Fantasy Bakeshop's Statement of Changes in Equity for the year ended December 31, and December 31, see format below

Balance, January 1,20x1

Balance, December 31, 20x1

Balance, December 31,20x2

Answer 1

Solution:

Cookie Fantasy Bakeshop

Statement of changes in Equity

As at 31.12.20x1

Balance, January 1, 20x1                                    0

Add: Owners Investment                              75,000

Add: Net income                                           37,545

Deduct: Owners drawings                            (15,000)

Balance, December 31, 20x1                        97,545

 

Cookie Fantasy Bakeshop

Statement of changes in Equity

As at 31.12.20x2

Balance, January 1, 20x2                             97,545

Add: Owners Investment                              31,050

Add: Net income                                           48,950

Deduct: Owners drawings                             (5,000)

Balance, December 31, 20x1                     172,545