Assume for each of the following independent cases that the accounting period for NewBiz ends on December 31, 2015, and that the income summary account at that date reflected a debit balance (loss) of $ 20,000:
Case A: Assume that NewBiz is a sole proprietorship owned by Proprietor A. Prior to the closing entries, the capital account reflected a credit balance of $ 50,000 and the drawings account a balance of $ 8,000.
Case B: Assume that NewBiz is a partnership owned by Partner A and Partner B. Prior to the closing entries, the owners’ equity accounts reflected the following balances: A, capital, $ 40,000; B, capital, $ 38,000; A, drawings, $ 5,000; and B, drawings, $ 9,000. Net earnings and losses are divided equally.
Case C: Assume that NewBiz is a corporation. Prior to the closing entries, the shareholders’ equity accounts showed the following: share capital, authorized 30,000 shares, outstanding 15,000 shares, $ 150,000; contributed surplus, $ 5,000; retained earnings, $ 65,000.
Required:
1. Prepare all of the closing entries indicated at December 31, 2015, for each of the three separate cases.
2. Show for each case how the owners’ equity section of the statement of financial position would appear at December 31, 2015.