Question

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

Answer 1

Answer:

Net Income / Net Loss:

Scenario A    $35,888 (-58,000 + 22,112)

Scenario B    $37,088 (-58,000 + 22,112 + 1,500)

Scenario C      -$9,112 (-58,000 + 45,000 + 22,112)

Scenario D      $17,112 (-58,000 + 35,000 + 22,112 + 18,000)

Explanation:

a) Data and Calculations:

                 Beginning   Ending  

Assets       $57,000   $24,463

Liabilities    115,000      46,575

Equity        (58,000)   ($22,112)

Net Income / Net Loss:

Scenario A    $35,888 (-58,000 + 22,112)

Scenario B    $37,088 (-58,000 + 22,112 + 1,500)

Scenario C      -$9,112 (-58,000 + 45,000 + 22,112)

Scenario D      $17,112 (-58,000 + 35,000 + 22,112 + 18,000)

b) The net income is the difference between the beginning equity plus new investments and the ending equity and dividends.