Question

Eagle Corp. operates Magnetic Resonance Imaging (MRI) clinics throughout the Northeast. At theend of the current period, the company reports the following amounts: Assets = $50,000; Liabilities= $27,000; Dividends = $3,000; Revenues = $14,000; Expenses = $9,000.Required:1.Calculate net income.2.Calculate stockholders' equity at the end of the period.

Answer 1

Eagle Corp.'s net income is calculated by subtracting expenses from revenues, resulting in $5,000. Stockholders' equity is found by subtracting liabilities from assets, totaling $23,000.

Step-by-step explanation:

To calculate the net income of Eagle Corp., you subtract the total expenses from the total revenues. The formula is as follows:

Net Income = Revenues - Expenses

Net Income = $14,000 - $9,000

Therefore, the net income is $5,000.

Next, we calculate the stockholders' equity at the end of the period using the accounting equation:

Assets = Liabilities + Stockholders' Equity

Rearranging the equation to solve for Stockholders' Equity gives us:

Stockholders' Equity = Assets - Liabilities

Stockholders' Equity = $50,000 - $27,000

Therefore, the stockholders' equity is $23,000.

Answer 2

Net Income = $5,000

Stakeholder's Equity = $23,000

Step-by-step explanation:

Net Income

Revenue $14,000

-Expenses $9,000

=Net income $5,000

Assets = $50,000

Liabilities = $27,000

Accounting Equation:

Assets = Stockholder's equity + Liabilities

$50,000 = Stockholder's equity + $27,000

Stockholder's equity = $50,000 - $27,000

Stockholder's equity = $23,000

Net income of Eagle Corp. is $5,000 and Stockholder's equity is $23,000.