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myrzilka [38]
3 years ago
12

Clark had no stock transactions in 2018​, so the change in​ stockholders' equity for 2018 was due to net income and dividends. I

f dividends were $ 55 comma 000​, how much was Clark​'s net income for 2018​? Use the accounting equation and the statement of retained earnings.
Business
1 answer:
liraira [26]3 years ago
6 0

Answer:

The question is not complete.

Here is the complete question:

Stockman Company had the following on the dates​ indicated:

                            12/31/18                   12/31/17

total assets         $540,000              $320,000

total liabilities          33,000             29,000

Stockman had no stock transactions in 2018​, so the change in​ stockholders' equity for 2018 was due to net income and dividends. If dividends were $65,000​, how much was Stockman​'s net income for 2018​? Use the accounting equation and the statement of retained earnings.

Here is the answer:

Explanation:

Accounting equation is given by :

Total Assets   = Total Liabilities  + Equity.

The first step is to determine the retained earnings at the beginning of the year:

                            As at 12/31/2017

Total Assets($)                                 =      Total Liabilities($)       Equity ($)

320,000                                                    29,000                    +   291,000(i)

i. The balancing figure amounts to retained earnings at the beginning of the year: $291,000.

To determine the net income for the current year, find the closing balance value for one complete side of the accounting equation (asset)

Total Assets($)                                 =      Total Liabilities($)       Equity ($)

540,000                                                      33,000                +                         x

The missing figure x is made up of closing retained earnings for the period which consist of opening retained earnings plus net income minus dividend. And the value of closing retained earnings suppose to balance  off the other side of the equation = $540,000 - $33,000

                                                       = $507,000.

The balance of the closing retained earnings suppose to $507,000 in order to balance the other side.

It can be represented as follow:

= Opening retained earnings   + Net income   -  Dividend

$507,000 =  $291,000                               +   x                      -  $65,000

$507,000 = $291,000 -$65,000 + x

$507,000 = $226,000 + x

= $281,000

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