What is equity in accounting?

Accounting Capital Equity for Balance Sheet Help!?

• I cannot figure this out after many attempts. Help please! Justin Harris and Paul Berryhill started the HB partnership on January 1, 2012. The business acquired $42,240 cash from Harris and $89,760 from Berryhill. During 2012, the partnership earned $60,700 in cash revenues and paid $30,300 for cash expenses. Harris withdrew $2,500 cash from the business, and Berryhill withdrew $3,700 cash. The net income was allocated to the capital accounts of the two partners in proportion to the amounts of their original investments in the business. This is what I have so far but the "_____?" is what I cannot get. Net Income $30,400 Ending Capital Balance $156,200 Less: withdraws by partners $6,200 Balance Sheet: Assets: $156,200 Total Assets: $156,200 Liabilities: 0 Equity: J. Harris, capital: _____? P. Berryhill, capital: _____? Total Equity: $156,200 Total Liabilities and Equity: $156,200 Thank you for your help!!

• Answer:

  42,240 + 89,760 = 132,000 total capital invested. Harris (42,240 / 132,000) x 30,400 = 9,728 portion of net income allotted. 9,728 - 2,500 = 7,228 added to capital account 42,240 + 7,228 = 49,468 current capital balance Berryhill (89,760 / 132,000) x 30,400 = 20,672 portion of net income allotted. 20,672 - 3,700 = 16,972 added to capital account 89,760 + 16,972 = 106,732 current capital balance