Answer:
A corporation had the following assets and liabilities at the beginning and end of this year.
Assets Liabilities
Beginning of the year $ 76,500 $ 32,796
End of the year 132,000 53,460
Details a b c d
1 Beginning of the year Equity 43,704 43,704 43,704 43,704
2 Owner's investment (+) - - 45,000 35,000
3 Dividends (-) - 10,200 - 10,200
4 Net income / loss (+) 34836 45,036 -10164 10,036
5 End of the year Equity 78540 78540 78540 78540
Explanation:
Equity = Assets - Liability
Beginning of the year = 76500 - 32796 = $43,704
End of the year = 132000 - 53460 = 78540
Net income = End of year equity - (Beginning of the year Equity + Owner's Investment - Dividends)
a) Net income = 5 - (1 + 2 - 3)
= 78540 - (43704 + 0 - 0)
= 34,836
b) Dividend of 850 per month = 850 * 12 = 10,200
Net income = 5 - (1 + 2 - 3)
= 78540 - (43704 + 0 - 10200)
= 45,036
c) Net Income = 5 - (1 + 2 - 3)
= 78540 - (43704 + 45000 - 0)
= -10,164
d) Dividend of 850 per month = 850 * 12 = 10,200
Net Income = 5 - (1 + 2 - 3)
= 78540 - (43704 + 35000 - 10200)
= 10,036
Owner's investment increases equity
Dividends reduce equity
Net Income increases equity
