Question

A corporation had the following assets and liabilities at the beginning and end of this year.

Beginning of the year End of the year
Assets $95,500 141,000
Liabilities $40941 57,105
a. Owner made no investments in the business, and no dividends were paid during the year.
b. Owner made no investments in the business, but dividends were $600 cash per month
c. No dividends were paid during the year, but the owner did invest an additional $45,000 cash in exchange for common stock
d. Dividends were $600 cash per month, and the owner invested an additional $35,000 cash in exchange for common stock Determine the net income earned or net loss incurred by the business during the year for each of the above separate cases (Decreases in equity should be indicated with a minus sign.)
Beginning of the year Equity
Owner investments
Dividends
Net Income (loss)
End of the year-Equity

Answer 1

a. Net Income =$29,336

b. Net Income = $29,936

c. Net Loss = - $15,664

d. Net Income = $5,064

Step-by-step explanation:

Assets = Liabilities + Equity

Equity = Asset - Liability

Beginning Equity :

Beg Equity = $95,500 - $40941

Beg Equity = $54,559

Ending Equity:

Ending Equity = $141,000 - $57,105

Ending equity = $83,895

Net Income = Ending equity - Beg equity + Dividends paid - investments made

a. When no investments made and no dividends paid:

Net Income = $83,895 - $54,559 + 0 - 0

Net Income =$29,336

b. When no investments made and $600 dividend paid:

Net Income = $83,895 - $54,559 + $600 - 0

Net Income = $29,936

c. When no dividend paid and $45,000 invested in common stock:

Net Income = $83,895 - $54,559 + 0 - $45,000

Net Income = - $15,664

d. When $35,000 investments made and $600 dividend paid:

Net Income = $83,895 - $54,559 + $600 - $35,000

Net Income = $5,064