Question

Using the expanded accounting equation, calculate and enter the answers for each question. You will need to use the answers you calculate for beginning and ending equity to answer the rest of the questions.

Assets and Liabilities Beginning of Year: $28,000 and $15,000

Assets and Liabilities End of Year: $64,000 and $29,000

1) What is the equity at the beginning of the year? Beginning Equity

2) What is the equity at the end of the year? Ending Equity

3) If the company issues common stock of $9,200 and pay dividends of $42,500, how much is net income (loss)? Net Income (Loss) =

4) If net income is $3,200 and dividends are $5,400, how much is common stock? Common Stock =

5) If the company issues common stock of $18,200 and net income is $17,000, how much is dividends? Dividends =

6) If the company issues common stock of $43,500 and pay dividends of $1,300, how much is net income (loss)? Net Income (Loss) =

Answer 1

Asset = Equity + Liability

1)

Opening Equity = Asset - Liability

   = 28000 - 15000

= 13000

2)

Closing Equity = Asset - Liability

   = 64000 - 29000

= 35000

3)

Issue = 9200

Dividend = 42500

=>

Opening equity + Issue + Net Income - Dividend = Closing equity

13000 + 9200 + Net Income - 42500 = 35000

Net Income = 35000 + 42500 - 13000 - 9200

       = 55300

4)

Net Income = 3200

Dividend = 5400

=>

Opening equity + Issue + Net income - dividend = Closing equity

13000 + Issue of common stock + 3200 - 5400 = 35000

Issue of common stock = 35000 + 5400 - 3200 - 13000

= 24200

5)

Issue = 18200

Net income = 17000

=>

Opening equity + Issue + Net income - dividend = Closing equity

13000 + 18200 + 17000 - dividend = 35000

Dividend = 13000 + 18200 + 17000 - 35000

= 13200

6)

Issue = 43500

Dividend = 1300

=>

Opening equity + Issue + Net income - dividend = Closing equity

13000 + 43500 + Net income - 1300 = 35000

Net income = 35000 + 1300 - 13000 - 43500

= (20200)