Question

Presented below are data for Caracas Corp.

2017 2018
Assets, January 1 $6,840 ?
Liabilities, January 1 ? $4,104
Stockholders' Equity, Jan. 1 ? $4,125
Dividends 855 969
Common Stock 912 975
Stockholders' Equity, Dec. 31 ? 3,399
Net Income 1,026 ?
Net income for 2021 is
a. $726 income.
b. $726 loss.
c. $243 loss.
d. $243 income.

Answer 1

The net income for 2021 is $3,393, which indicates an income of $243.

Step-by-step explanation:

To find the net income for 2021, we need to determine the missing values in the given data. The common stock for 2018 is $975, which means the stockholders' equity on January 1, 2018, is also $975. The stockholders' equity on December 31, 2018, is $3,399. To find the net income, subtract the stockholders' equity on January 1, 2018, from the stockholders' equity on December 31, 2018, and add the dividends paid:

Net income = Stockholders' Equity, Dec. 31 - Stockholders' Equity, Jan. 1 + Dividends

Net income = $3,399 - $975 + $969

Net income = $3,399 - $975 + $969 = $3,393

Therefore, the net income for 2021 is $3,393. This corresponds to option d. $243 income.