Question

Terry Woods opened Par Golf as a sole proprietor by investing $58,400 cash on January 1, 2017. Because the business was new, it operated at a net loss of $11,700 for 2017. During the year, Terry withdrew $20,300 from the business for living expenses. Terry also had $3,500 of interest income from sources unrelated to the business.

Required:

Calculate the balance of Owner's Equity account in Par Golf's balance sheet as of December 31, 2017.

Woods, capital

$

Answer 1

Calculation of Woods Capital:

Description	Amount
Beginning capital	$58400
Less: Net loss	($11700)
Less: Drawings	($20300)
Ending capital	$26400

So, balance in Equity account in Par Golf's balance sheet as of December 31, 2017 is $26400.

(since the interest income of $3500 is unrelated to the business, so it will not be taken in calculation of owner's equity in the balance sheet of Par Golf).