Financial information related to the proprietorship of Ebony Interiors for February and March 2016 is as follows: Accounts February 29, 2016 March 31, 2016
Accounts payable $329,000 $398,000
Accounts receivable796,000 952,000
Cash 337,000 381,000
Justin Berk, capital ? ?
Supplies 33,000 34,000
Required:
1.Prepare balance sheets for Ebony Interiors as of February 29 and March 31, 2016. Refer to the lists of Accounts, Labels, and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading.
2.Determine the amount of net income for March, assuming that the owner made no additional investments or withdrawals during the month.
3.Determine the amount of net income for March, assuming that the owner made no additional investments but withdrew $47,000 during the month.

Ebony Interiors

1. Balance sheets for Ebony Interiors as of February 29 and March 31, 2016:

                                            February 29      March 31, 2016

Cash                                       $337,000             $381,000

Accounts receivable               796,000               952,000

Supplies                                     33,000                 34,000

Total assets                         $1,166,000          $1,367,000

Accounts payable                $329,000            $398,000

Justin Berk, capital                 837,000              969,000

Total liabilities + equity      $1,166,000          $1,367,000

2. The amount of net income for March, assuming that the owner made no additional investments or withdrawals during the month:

March 31 Capital =  $969,000

February 28 Capital (837,000)

Net income              $132,000

3. The amount of net income for March, assuming that the owner made no additional investments but withdrew $47,000 during the month:

March 31 Capital =  $969,000

Drawings                      47,000

February 28 Capital (837,000)

Net income              $179,000

Explanation:

a) Data and Calculations:

Financial information for February and March 2016 is as follows:

Accounts payable $329,000 $398,000

Accounts receivable 796,000 952,000

Cash 337,000 381,000

Justin Berk, capital ? ?

Supplies 33,000 34,000

b) Net income can be determined by comparing the beginning capital (equity) with the ending capital balance (equity).  This is because equity is equal to the common stock plus the retained earnings or adjusted net income.  Personal withdrawals by the owner affect the ending equity, which includes the net income.