Problem

A corporation had the following assets and liabilities at the beginning and end of this ye...

A corporation had the following assets and liabilities at the beginning and end of this year.

 

Assets

Liabilities

Beginning of the year

$ 70,000

$30,000

End of the year

115,000

46,000

Determine the net income earned or net loss incurred by the business during the year for each of the following separate cases:

a. Owner made no investments in the business and no dividends were paid during the year.


b. Owner made no investments in the business, but dividends were $1,250 cash per month.


c. No dividends were paid during the year, but the owner did invest an additional $45,000 cash in exchange for common stock.


d. Dividends were $1,250 cash per month and the owner invested an additional $25,000 cash in exchange for common stock.

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