Question

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

Assets Liabilities
Beginning of year $ 231,000 $ 96,500
End of the year 262,000 78,400
Common stock in the amount of $ 23,500 was issued and dividends of $ 6,700 were paid during the year. What is the amount of net income for the year?

a) $18,900

b) $65,900

c) $49,100

d) $32,300

Answer 1

$32,300

Step-by-step explanation:

Begining equity = Begining asset - Begining liabilities

= $231,000 - $96,500 = $134,500

Ending equity = Ending asset - Ending liabilities

= $262,000 - $78,400 = $183,600

We will find the net income for the year using the below formula:

Ending equity = Begining equity + Stock issuance + Net income - Dividend paid, or:

$183,600 = $134,500 + 23,500 + Net income - $6,700.

Solve the above equation we get Net income = $32,300