Question

Jarvis began operations on January 1, Year 1 with an owner investment of $12,400. There have been no additional owner investments. In its first two years of operations, it reported the following at its December 31 year-end.
Year 1 Year 2
Net income $ 33,600 $ 56,000
Jarvis, Withdrawals $ 19,080 $ 15,680

(a) Prepare the statement of owner's equity for Year 1 at its December 31 year end.
(b) Prepare the statement of owner's equity for Year 2 at its December 31 year end.

Answer 1

(a)  The statement of owner's equity for Year 1  is $26,920

(b)  The statement of owner's equity for Year  2 is $52,720

(a) Preparation of  the statement of owner's equity for Year 1 at its December 31 year end.

JARVIS statement of owner's equity for year ended December 31 Year 1  

Owner investment  $12,400

Add Net income $ 33,600

Less Jarvis, Withdrawals ($ 19,080)

Statement of owner's equity for Year 1 $26,920

(b) Preparation of  the statement of owner's equity for Year 2 at its December 31 year end.

JARVIS statement of owner's equity for year ended December 31 Year 2

Owner investment $12,400

Add Net income  $ 56,000

Less  Jarvis, Withdrawals  $ 15,680

Statement of owner's equity for Year 2 $52,720

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