Question

A corporation had the following assets and liabilities at the beginning and end of this year.Assets LiabilitiesBeginningofd'ieyear......... $60,000 $20,000Endoftheyear............. I05,000 36,000Determine the net income earned or net loss incurred by the business during the year for each of the following separatecases: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 iex-change for common stoclcd. Dividends were $1,250 cash per month and the owner invested an additional $35,000 cash in ex-change for commonstoclc

Answer 1

Answer:

Explanation:

The computation of the net income earned or net loss incurred by the business during the year is shown below:

Particulars                              a                   b            c              d

Opening Balance of Equity   $40,000     $40,000   $40,000  $40,000

Owner investments                                                 $55,000   $35,000

Less: Dividends                                       -$15,000                    -$15,000

Net income(loss)                   $29,000      $44,000    -$26,000  $9,000

Ending balance of equity        $69,000       $69,000    $69,000   $69,000

The opening and ending balance of equity has come by considering

= Total assets - Total liabilities