Question

Exercise 4-1 Presented below are changes in all the account balances of Windsor Furniture Co. during the current year, except for retained earnings. Increase (Decrease) Increase (Decrease) Cash $70,710 Accounts Payable $(51,900 ) Accounts Receivable (net) 45,300 Bonds Payable 82,560 Inventory 131,400 Common Stock 134,800 Investments (48,390 ) Paid-In Capital in Excess of Par—Common Stock 14,220 Compute the net income for the current year, assuming that there were no entries in the Retained Earnings account except for net income and a dividend declaration of $25,290 which was paid in the current year. Net income $

Answer 1

Ans:Net Income=$44,630

Calculation of Net Income:

$70,710 Increase in cash
+51,900 Decrease in Accounts Payable
+45,300 Increase in Accounts Receivable
-82,560 Increase in Bonds Payable
+131,400 Increase in inventory
-134,800 Increase in common stock
-48,390 Decrease in investments
-14,220 Increase in paid-in capital
+25,290 dividend declared
=$44,630 Net income