At the beginning of the current reporting period, the equity of Henry Nkosi, a sole trader in the shoe trade, was R50 000. During this period, the entity earned revenue of R70 000 and incurred expenses of R58 000 . Nkosi withdrew R15 000 cash during the period. At the end of the period, the equity of the business amounts to +ICY- o. R62 000 . a. R47 000 . b. R77 000 . d. R38 000 . e. None of the above

To calculate the equity at the end of the period, we can use the following formula: Ending Equity = Beginning Equity + Revenue - Expenses - Withdrawals. Plugging in the numbers: Ending Equity = R50,000 + R70,000 - R58,000 - R15,000 = R47,000. So, the correct answer is (a) R47,000. This situation gives a classic demonstration of how withdrawals by the owner impact the equity of a sole trader's business. In essence, while the business may earn substantial income, any cash taken out by the owner can significantly alter the equity and show how the owner's decisions influence their financial standing. It's like balancing a seesaw—one side goes down when the other side takes a dip! Understanding how withdrawals and revenues impact equity is key for any entrepreneur. Make sure to track personal withdrawals as they can sometimes lead to financial strain on the business. A common mistake is underestimating the effect of regular withdrawals that may seem minor but add up over time. Keep a keen eye on your cash flow to avoid surprises when calculating ending equity!