Financial information related to Infra-Systems Company, a proprietorship, for the month ended November 30, 2014, is as follows:

Financial information related to Infra-Systems Company, a proprietorship, for the month ended November 30, 2014, is as follows:

Net income for November                      $275,000
Lori Izzo’s withdrawals during November        40,000
Lori Izzo’s capital, November 1, 2014         400,000

a. Prepare a statement of owner’s equity for the month ended November 30, 2014.

b. Why is the statement of owner’s equity prepared before the November 30, 2014, balance sheet?

Answer:
a.

INFRA-SYSTEMS COMPANY Statement of Owner’s Equity For the Month Ended November 30, 2014 Lori Izzo, capital, November 1, 2014  $400,000 Net income for November $275,000  Less withdrawals 40,000  Increase in owner’s equity  235,000 Lori Izzo, capital, November 30, 2014  $635,000   


b. The statement of owner’s equity is prepared before the November 30, 2014, balance sheet because Lori Izzo, Capital as of November 30, 2014, is needed for the balance sheet.