Chapter 1, Problem 1.18EX

a)

To determine

Statement of owners’ equity:

This statement reports the final balance of owner’s equity for a particular period of time, after certain adjustments like additional capital, net income from income statement and drawings. This statement is prepared after the income statement.

Balance sheet:

This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders’ equity) over those resources. The resources of the company are assets which include money contributed by stockholders and creditors. Hence, the main elements of the balance sheet are assets, liabilities, and stockholders’ equity.

To prepare: Statement of owner's equity of Company UP for the month ended April 30, 2016.

b)

To determine

To explain: the reason for preparing the statement of owner's equity before preparing the balance sheet.