Answer:
Step-by-step explanation:
Toth Company's financial statements show the following assets and liabilities on December 31 of 2014, 2015, and 2016:
Date Total Assets Total Liabilities
2014 $400,000 $260,000
2015 $480,000 $300,000
2016 $590,000 $400,000
Toth Company started operating on January 1, 2014, with an initial investment of $100,000 from stockholders. Use this information to calculate the net income or loss for each of the following years:
(a) In 2014, assuming that Toth paid $15,000 in dividends during the year, the net income can be calculated as follows:
Net income = Ending Stockholders' Equity - Beginning Stockholders' Equity + Dividends
Net income = $140,000 - $100,000 + $15,000
Net income = $55,000
(b) In 2015, assuming that stockholders made an additional investment of $50,000 and Toth paid no dividends during the year, the net income can be calculated as follows:
Net income = Ending Stockholders' Equity - Beginning Stockholders' Equity - Additional Investment
Net income = $180,000 - $140,000 - $50,000
Net income = ($10,000)
(c) In 2016, assuming that stockholders made an additional investment of $15,000 and Toth paid dividends of $30,000 during the year, the net income can be calculated as follows:
Net income = Ending Stockholders' Equity - Beginning Stockholders' Equity - Additional Investment + Dividends
Net income = $190,000 - $180,000 - $15,000 + $30,000
Net income = $25,000