Question

At the beginning of the current fiscal year, the balance sheet for Davis Co. showed liabilities of $224,000. During the year, liabilities decreased by $12,600, assets increased by $45,500, and paid-in capital increased from $21,000 to $134,400. Dividends declared and paid during the year were $17,500. At the end of the year, stockholders' equity totaled $300,300. Required: Calculate net income (or loss) for the year. Indicate the financial statement effect. (Enter decreases with a minus sign to indicate a negative financial statement effect.) Stockholders' Equity Assets PIC - - Liabilities + $ 224,000 + (12,600) + $ Beginning: Changes: 21,000+ 45,500 Ending: + $ 134,400 + ($300,300 total SE)

Answer 1

Solution: Stockholders' Equity Beginning: Changes: Assets = Liabilities + PIC + RE 466,200 b = 224000 + 21,000 + 221,200 d 45,5001 = -12,600| + | 113,4001CI+ -37,800 f Net income/(loss) -17500 Dividend 511700 a = 211400 + 134400 + 165900 e (300300 total SE) Ending: Statement of Stockholders' Equity Retained earnings, beginning 221,200 Less: Net loss -37,800 Less: Dividends -17500 Retained earnings, ending 165,900

working: a Assets=Liab+Total SE 511700 211400+300 300 b Assest at beg=Assets at end-Increase in assets |466200 511700-45500 C Changes in PIC=PIC at end-PIC at beg 113400 134400-21000 d RE =Assets-liab-PIC 221200 466200-224000-21000 e RE=Total SE-PIC 165900 300300-134400 f Net income/(loss)=RE at end+Div-RE at beg 37800 165900+17500-221200