Question

Bennett Griffin and Chula Garza organized Cole Valley Book Store as a corporation; each contributed $71,500 cash to start the business and received 4,700 shares of common stock. The store completed its first year of operations on December 31, current year. On that date, the following financial items for the year were determined: December 31, current year, cash on hand and in the bank, $68,650; December 31, current year, amounts due from customers from sales of books, $43,000; unused portion of store and office equipment, $73,000; December 31, current year, amounts owed to publishers for books purchased, $13,600; one-year note payable to a local bank for $3,000. No dividends were declared or paid to the stockholders during the year. What was the amount of net income for the year?

Answer 1

Answer:

Total assets:

Cash	$68,650
Accounts receivable	$43,000
Store and office equipment	$73,000
Total Assets	$184,650

Total Liabilities:

Accounts payable	$13,600
Notes payable	$3,000
Total Liabilities	$16,600

Total assets = Total liabilities + Stockholder's equity

Total assets = Total liabilities + Common stock + Net income

$184,650 = $16,600 + $71,500 + Net income

$184,650 = $88,100+ Net income

Net income = $184,650-$88,100

Net income = $96,550