Question

A tabular analysis of the transactions made during August 2022 by Sandhill Co. during its first month of operations is shown below. Each increase and decrease in stockholders' equity is explained. Assets = Liabilities + Stockholders' Equity Cash + A/R + Supp. + Equip. = Accounts Payable + Common Stock + Retained Earnings Revenues - Expenses - Dividends 1. $15,500 $15,500 -1,000 $4,900 $3,900 -750 $750 3,700 $5,900 $9,600 Serv. Rev. -1,600 - 1,600 -1,000 -$1,000 -770 -$770 Rent Exp. 370 -370 -2,000 -2,000 Salar. Exp. 350 -350 Util. Exp. (b) Determine how much stockholders' equity increased for the month. Increase in stockholders' equity $ (c) Compute the net income for the month. The net income $

Answer 1

Answer

• Reqquirement [b]
  Increase in Stockholder’s Equity = $ 15500[1] + $ 9600[4] - $ 1000[6] - $ 770[7] - $ 2000 [9] - $ 350[10]
  = 15500 + 9600 – 1000 – 770 – 2000 – 350
  = $ 24,980
• Requirement [c]
  Net Income = Revenues – Expenses
  =$ 9600[4] - $ 770[7] - $ 2000 [9] - $ 350[10]
  = 9600 – 770 – 2000 – 350
  = $ 6,480