Question

At the beginning of the current fiscal year, the balance sheet of Cummings Co. showed liabilities of $439,000. During the year, liabilities decreased by $74,000, assets increased by $151,000, and paid-in capital increased by $15,000 to $381,000. Dividends declared and paid during the year were $123,000. At the end of the year, stockholders' equity totaled $751,000.

Required:
Calculate net income or loss for the year. (Amounts to be deducted should be indicated with a minus sign.)

	Stockholders’ Equity Assets = Liabilities + PIC + RE Beginning = $439,000 + + Changes 151,000 = (74,000) + 15,000 + Ending = + $381,000 + $751,000 SE

Answer 1

	Stockholders’ Equity Assets = Liabilities + PIC + RE Beginning 965,000 = $439,000 + 366,000 + 160,000 Changes 151,000 = (74,000) + 15,000 + 333,000 - 123,000 Ending 1,116,000 = $365,000 + $381,000 + $370,000 $751,000 SE

1.

Ending SE = Ending PIC + Ending RE

751,000 = 381,000 + Ending RE

Ending RE = $370,000

2.

Ending PIC = Beginning PIC + Increase in PIC

381,000 = Beginning PIC + 15,000

Beginning PIC = $366,000

3.

Ending liabilities = Beginning liabilities - Decrease in liabilities

= 439,000 - 74,000

= $365,000

4.

Ending assets = Ending liabilities + Ending SE

= 365,000 + 751,000

= $1,116,000

5.

Ending assets = Beginning assets + Increase in assets

1,116,000 = Beginning assets + 151,000

Beginning assets = $965,000

6.

Beginning assets = Beginning liabilities + Beginning PIC + Beginning RE

965,000 = 439,000 + 366,000 + Beginning RE

Beginning RE = $160,000

7.

Ending RE = Beginning RE + Net income - Dividends

370,000 = 160,000 + Net income - 123,000

Net income = $333,000