Net income for November $275,000
Lori Izzo’s withdrawals during November 40,000
Lori Izzo’s capital, November 1, 2014 400,000
a. Prepare a statement of owner’s equity for the month ended November 30, 2014.
b. Why is the statement of owner’s equity prepared before the November 30, 2014, balance sheet?
Answer:
a.
INFRA-SYSTEMS COMPANY Statement of Owner’s Equity For the Month Ended November 30, 2014 Lori Izzo, capital, November 1, 2014 $400,000 Net income for November $275,000 Less withdrawals 40,000 Increase in owner’s equity 235,000 Lori Izzo, capital, November 30, 2014 $635,000
b. The statement of owner’s equity is prepared before the November 30, 2014, balance sheet because Lori Izzo, Capital as of November 30, 2014, is needed for the balance sheet.