Read the entity, period and units first. In this simplified model, net income is earned service revenue minus the expenses incurred for the period. Owner contributions and loan proceeds are not revenue; owner withdrawals are not expenses. Ending equity = beginning equity + contributions + net income - withdrawals. A balance sheet lists assets, liabilities and ending equity on one date.
Worked example
Separate example: revenue 80 minus expenses 25 gives net income 55. Beginning equity 100 + owner contribution 20 + income 55 - withdrawal 5 = ending equity 170. End-date assets 210 = liabilities 40 + equity 170. Do not add income to equity again when checking that balance sheet.
Paper Kite Workshop / June 1-30 and June 30
All amounts are fictional dollars. June 1-30: services earned 260, supplies consumed 45, rent used 75, owner contribution 30 and owner withdrawal 20. Beginning equity was 150. June 30: Cash 160, Accounts Receivable 110, Equipment 100 and Loan Payable 70. These are final adjusted amounts; no other accounts, interest, taxes or depreciation apply. The loan is borrowing, not a customer payment. Use only these records, not personal finances.