Question

1. Baltimore Company experienced a total increase in stockholders' equity of $27,000 during the current year. Stockholders' equity was increased by additional issuances of $56,000 capital stock during the year. No dividends were paid. Expenses incurred during the year were $120,000. How much was Baltimore's revenue for the year?
2. Baltimore Company experienced an increase in total assets of $10,500 during the current year. During the same time period, total liabilities increased $8,100. Shareholders made no investments during the year and no dividends were paid. How much was Baltimore's net income?

Answer 1

Answer:

1)    91,000 revenues

2)    2,400 income

Explanation:

increase from shares         +56,000

ncrease from revneues          X

decrease from expense    -120,000

total increase                       + 27,000

the revenues where for

270,00 + 120,000  - 56,000 = 91,000

Assets increase        10,500

Liabilities increase for 8,100

Equity incrase according to accounting equation:

Assets = liab + equity

10,500 = 8,100 + equity

equity = 2,400

there is no dividends or share issuance nor treasury stock thus, all this variacion is explained through net income