Question

At the beginning of the current fiscal year, the balance sheet for Davis Co. showed liabilities of $256,000. During the year liabilities decreased by $14,400, assets increased by $52,000, and paid-in capital increased from $24,000 to $153,600. Dividends declared and paid during the year were $20,000. At the end of the year, stockholders’ equity totaled $343,200.

Required:
Calculate net income (or loss) for the year. (Negative amounts should be indicated by a minus sign.)

Answer 1

$209,600

Step-by-step explanation:

Calculation of the net income (or loss) for the year

Stockholders’ equity = Total Capital + Net Income - Dividend

Therefore the Net Income will be:

Using this formula

Net income= Stockholders’ equity + Dividend - Total Capital

Where,

Stockholders’ equity =$343,200

Dividend =$20,000

Total Capital =$153,600

Let plug in the formula

Net income= $343,200 + $20,000 - $153,600

Net income= $209,600

Therefore the net income (or loss) for the year will be $209,600