WISH oas Vegas Video Rentals Clines Grocery 65000 200000 640

WISH oas Vegas Video Rentals Cline\'s Grocery 65,000 200,000 64,000$ 80,000 25,000 43,000 E1-21 Using the accounting equation Green City Builders balance sheet data at May 31, 2016, and June 30, 2016, follow: May 31, 2016 S 188,000 122,000 June 30, 2016 5 244,000 Total assets Total liabilities 88,000 For each of the following situations with regard to owners contributions and withdrawals of the business, compute the amount of net income or net loss during June 2016. a·The owner contributed $7,500 to the business and made no withdrawals. b. The owner made no contributions. The owner withdrew cash of $13,000. c. The owner made contributions of $20,000 and withdrew cash of $18,000.

Solution

Calculation of Owner\'s Equity :-

Formula, Owner\'s Equity = Total assets - Liabilities

Owner\'s Equity on May 31 :-

= $188000 - $122000

= $66000

Owner\'s Equity on June 30 :-

= $244000 - $88000

= $156000

Calculation of Net Income :-

Net Income = Owner\'s Equity on june 30 + Owner\'s Withdrawals - Owner\'s Contribution - Owner\'s Equity on may 31

a). Net income :-

= $156000 + $0 - $7500 - $66000

= $82500

b). Net Income :-

= $156000 + $13000 - $0 - $66000

= $103000

c). Net Income :-

= $156000 + $18000 - $20000 - $66000

= $88000