Answer to Question #249766 in Accounting for Another you

Question

A. Julia is the owner of BEAuty Finds Onlime Shop. She started selling in January 1, 2020 and would like to know her claims in the business for the year ended, December 31, 2020. She hired and provided you with information that she had 50,000 initial investment. During the year, she made an additional 25,000 to fund her shop. The store also had 60,000 cash and credit sales and spent 25,000 for all its expenses. She also had 1,500 and 2,000 withdrawals in May and October respectively.
1. What financial statement(s) will you prepare to answer Julia's claims in the business for 2020.? How will you present these statement(s) to the owner? How much then shall be BEAuty Finds Online Shop capital balance on January 1, 2021?

Answer 1

I will prepare income statement and balance sheet and cash flow statement.

Income statement

Cash sales 60,000

Less Expenses 25,000

Total profit 35,000

Capital owned = Initial Capital + Added Capital + Retained earnings (Profits) - Withdrawals

Capital Owned = 50,000+25,000+35,000-1500-2000

Capital owned = 106,500