A company had the following assets and liabilities at the beginning and end of the current...

A company had the following assets and liabilities at the beginning and end of the current year:

	Assets		Liabilities
Beginning of year	$	230,000	$	96,000
End of the year		261,000		78,200

Common stock in the amount of $ 23,000 was issued and dividends of $ 6,600 were paid during the year. What is the amount of net income for the year?

Expert Solution

Solution:
	Net income for the year = $32,400

Working Notes:

	At Beginning of year
	Equity = Assets - Liabilities
	=230,000 - 96,000 =134,000

	At Beginning of year Equity	134,000

	At the End of the year

	Equity = Assets - Liabilities
	=261,000 - 78,200 =182,800

	At the End of the year Equity	182,800

Hence,
	Addition to Equity during the Year = At the End of the year Equity - At Beginning of year Equity
		=182,800-134,000
		=48,800


Now
	Calculation of Net Income

	Addition to Equity during the Year	48,800
Less:	Common stock issued during the year	23,000
Add:	Dividend paid during the year	6,600

	Net income for the year	32,400

Please feel free to ask if anything about above solution in comment section of the question.

ekkarill92 answered 3 years ago

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