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(4 points) Changes in all balance sheet account balances of E during the current year, EXCEPT the change in E’s retained earnings account follow. Compute E’s net income (or net loss) for the current year assuming the only 2 entries E made to her retained earnings account during the current year were for a cash dividend declared and paid of $165,000 and her net income (or net loss) for the current year. (This is NOT a statement of cash flows problem – do NOT format it like a statement of cash flows problem.)
Cash increased $ 56,000
Accounts receivable decreased $ 43,000
Inventory decreased $105,000
Fixed assets increased $262,000
Accumulated depreciation increased $ 88,000
Accounts payable increased $117,000
Salaries payable decreased $ 64,000
Unearned revenue increased $ 23,000
Notes payable decreased $100,000
Common stock increased $ 75,000
Expert Answer
Solution
Change in assets:$56,000-$43000-$105,000+$262,000-$88,000=$82,000
Change in liabilities=$117,000-$64,000+$23,000-$100,000= -$24,000
stockholders equity=change in assets-change in liabilities
=$82,000-(-$24000)
$106,000
Net income =$106,000-$75,000+$165,000
=$196,000
Net income=$196,000
