Bonus Question. Presented below is certain information pertaining to Edson Compa
ID: 2589349 • Letter: B
Question
Bonus Question.
Presented below is certain information pertaining to Edson Company.
Assets, January 1, 2016 $250,000
Assets, December 31, 2016 230,000
Liabilities, January 1, 2016 150,000
Common stock, December 31, 2016 80,000
Retained earnings, December 31, 2016 31,000
Common stock sold during the year 10,000
Dividends declared during the year 13,000
Compute the net income for the year (
Explanation / Answer
Calculation of the net income for the year:
Assets, January 1, 2016 $250,000
Less: Liabilities, January 1, 2016 ($150,000)
Stockholders' equity, January 1, 2016 $100,000
Common stock, December 31, 2016 $80,000
Add: Retained earnings, December 31, 2016 $31,000
Stockholder's equity, December 31, 2016 $111,000
Increase in stockholders' equity $11,000
Add back decrease due to dividends $13,000
Less: increase due to common stock sold ($10,000)
Net income $14,000