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Statement of Changes in Equity

Michelle Perez opened Red Goldy Bakeshop on February 15, 20x1, investing P75,000. The business earned a net income of P37,545 in 20x1. Michelle withdrew P15,000 for personal use. In 20x2, Michelle invested additional funds of P13,400 and P17,650. The business earned P48,950 net income in 20x2. Michelle's Drawings account had a balance of P200,000 on December 31, 20x2.
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0% found this document useful (0 votes)
545 views2 pages

Statement of Changes in Equity

Michelle Perez opened Red Goldy Bakeshop on February 15, 20x1, investing P75,000. The business earned a net income of P37,545 in 20x1. Michelle withdrew P15,000 for personal use. In 20x2, Michelle invested additional funds of P13,400 and P17,650. The business earned P48,950 net income in 20x2. Michelle's Drawings account had a balance of P200,000 on December 31, 20x2.
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Problem 1:

On February 15, 20x1, Michelle Perez opened Red Goldy Bakeshop. She
invested P75,000 to purchase an oven and bakery supplies. The business generated a
net income of P37,545 in 20x1. Moreover, Michelle used P15,000 from the account of
Red Goldy Bakeshop to pay the electricity and phone bills of her house.

Michelle invested an additional P13,400 and P17,650 on March 16, 20x2 and
August 19, 20x2, respectively. Net income for 20x2 was reported at P48,950. Michelle,
Drawings account has a balance of P200,000 on December 31, 20x2.

Required: Prepare Red Goldy Bakesop’s Statement of Changes in Equity for the year
ended December 31, 20x1 and December 31, 20x2.

Red Goldy Bakeshop


Statement of Changes in Equity
For the year ended December 31, 20x1

Michelle, Capital – Beginning P75,000


Add: Net income for 20x1 37,545
Less: Michelle, Drawings 15,000
Michelle, Capital – Ending P97,545

Red Goldy Bakeshop


Statement of Changes in Equity
For the year ended December 31, 20x2

Michelle, Capital – Beginning P97,545


Add: Net income for 20x2 48,950
Add: Additional Investments
March 16, 20x2 P13,400
August 19, 20x2 17,650 31,050
Less: Michelle, Drawings 200,000
Michelle, Capital – Ending P(22,455)

Problem 2:
The Playdate Kiddie Gym is owned and managed by Cris Roxas. The balance of
the Cris Roxas, Capital is P765,430 and P857,340 on December 31, 20x1 and
December 31, 20x2, respectively. Net income for 20x2 is P115,465. Cris did not make
additional contribution to the business in 20x2. Determine the balance of the Cris
Roxas, Drawing account on December 31, 20x2.

Beginning Capital = 765,430


Ending Capital = 857,340
Net Income = 115,465
Additional Investments = none
Drawings = ???

Beginning Capital + Net Income + Additional Investments – Drawings = Ending Capital


765,430 + 115,465 + 0 – Drawings = 857,340
880,895 – Drawings = 857,340
880,895 – 857,340 = Drawings
23,555 = Drawings

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