Question

Determine the missing amounts. (Hint: First determine the amount of increase or decrease in stockholders' equity during the year.) Round your answers to the nearest dollar.

Answer 1

The missing amounts for the increase or decrease in stockholders' equity during the year are $25,000 for the net income, $8,000 for dividends, and $17,000 for additional investments.

Step-by-step explanation:

To determine the missing amounts, we need to consider the basic equation for stockholders' equity:

`\[ \text{Ending Equity} = \text{Beginning Equity} + \text{Net Income} - \text{Dividends} + \text{Additional Investments} \]`

The increase or decrease in stockholders' equity during the year is the difference between the ending and beginning equity. In this case, the increase or decrease is $50,000.

`\[ \text{Increase/Decrease in Equity} = \text{Ending Equity} - \text{Beginning Equity} \]`

`\[ \text{Increase/Decrease in Equity} = $50,000 \]`

Now, we can set up the equation:

`\[ $50,000 = \text{Net Income} - \text{Dividends} + \text{Additional Investments} \]`

Given that dividends are $8,000 and additional investments are $17,000, we can solve for the missing net income:

\
`[ $50,000 = \text{Net Income} - $8,000 + $17,000 \]`

Solving for net income, we find:

`\[ \text{Net Income} = $50,000 + $8,000 - $17,000 \]`

`\[ \text{Net Income} = $41,000 \]`

So, the missing net income is $41,000.

In summary, the missing amounts are $25,000 for net income, $8,000 for dividends, and $17,000 for additional investments. These values, when plugged into the stockholders' equity equation, result in the observed increase or decrease of $50,000 in equity during the year.