Reference no: EM132874836
Problem - Net income and owner's equity for four businesses - Four different proprietorships, Aries, Gemini, Leo, and Pisces, show the same balance sheet data at the beginning and end of a year. These data, exclusive of the amount of owner's equity, are summarized as follows:
|
|
Total Assets
|
Total Liabilities
|
|
Beginning of the year
|
$400,000
|
$400,000750,000
|
|
End of the year
|
750,000
|
300,000
|
On the basis of the above data and the following additional information for the year, determine the net income (or loss) of each company for the year. (Hint: First determine the amount of increase or decrease in owner's equity during the year.)
Aries: The owner had made no additional investments in the business and had made no withdrawals from the business.
Gemini: The owner had made no additional investments in the business but had withdrawn $40,000.
Leo: The owner had made an additional investment of $90,000 but had made no withdrawals.
Pisces: The owner had made an additional investment of $90,000 and had withdrawn $40,000.