Question

20 Required Information [The following information applies to the questions displayed below) The accounting records of Nettie Distribution show the following assets and liabilities as of December 31, 2018 and 2019. December 31 Cash Accounts receivable office supplies Office equipment Trucks Building 2018 2019 6.300 $15.648 26,240 19,100 3,1601,960 44, 44, eee 148,00 157,00 0 80,000 0 60.000 3,500 33,500 40,000 Land L Accounts payable ote payable 2. Compute net income for 2019 by comparing total equity amounts for these two years and using the following information: During 2019, the owner Invested $35.000 additional cash in the business (in exchange for common stock) and the company paid a $19.000 cash dividend. Equity, December 31, 2018 Equity, December 31, 2010

Answer 1

Equity balance is equal to total assets less outsider liabilities. Total equity from the given information is:

Particulars	2018	2019
Cash	$          64,300	$          15,640
Accounts receivable	$          26,240	$          19,100
Office supplies	$            3,160	$            1,960
Office equipment	$          44,000	$          44,000
Trucks	$        148,000	$        157,000
Buildings	$                   -	$          80,000
Land	$                   -	$          60,000
Total assets	$        285,700	$        377,700
Accounts payable	$            3,500	$          33,500
Note payable	$                   -	$          40,000
Outside liabilities	$            3,500	$          73,500
Total equity	$        282,200	$        304,200

Net income for the year is = 2019 equity + dividend - 2018 equity - additional contribution = $304,200 + $19,000 - $282,200 - $35,000 = $6,000

Below is filled in format:

Equity, December 31, 2018	$        282,200
Additional contribution	$          35,000
Net profit	$            6,000
	$        323,200
Cash dividend	$         (19,000)
Equity, December 31, 2019	$        304,200

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