Question

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 $1,250 cash per month.
c. no dividends were paid during the year, but the owner did invest an additional $55,000 cash in exchange for common stock.
d. dividends were $1,250 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.)

Answer 1

the first part of the question is missing:

Assets Liabilities

Beginning of the year $57,000 $24,436

End of the year $115,000 $46,575

equity = assets - liabilities

beginning = $57,000 - $24,436 = $32,564

ending = $115,000 - $46,575 = $68,425

a b c d

Beginning of the year equity $32,564 $32,564 $32,564 $32,564

Owner investments 0 0 $55,000 $35,000

Dividends ($1,250 x 12) 0 ($15,000) 0 ($15,000)

Net income (loss) $35,861 $50,861 ($19,139) $15,861

End of the year equity $68,425 $68,425 $68,425 $68,425

net income = end equity + dividends - investments - beginning equity