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    algir89's Avatar
    algir89 Posts: 2, Reputation: 1
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    #1

    Aug 18, 2010, 12:04 PM
    Net Income from Total Assets and Liabilities?
    I'm very confused. Here's the question:

    Total Assets as of May 31, 2010 = $174,000
    Total Liabilities as of May 31, 2010 = $104,000
    Total Assets as of June 30, 2010 = $208,000
    Total Liabilities as of June 30, 2010 = $127,000

    Following are 3 situations about owner's investments and withdrawals from the business during June. For each situation, compute the amount of net income or net loss during June 2010.
    a.) the owner invested $5,000 and made no withdrawals.
    b.) the owner invested nothing and made $14,000 of withdrawals.
    c.) the owner invested $15,000 and made $28,000 of withdrawals.

    I have absolutely no clue how to go about this! Please help!
    ArcSine's Avatar
    ArcSine Posts: 969, Reputation: 106
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    #2

    Aug 18, 2010, 01:11 PM
    Assets at May 31, minus Liabilities at May 31, equals Total Equity at May 31.

    Do it again for June 30: A - L = E.

    Now you know total equity at June 1, and at June 30. By how much did equity change for the month of June, in total?

    OK, there are four things that might have a hand in creating that change: Net income and owner's investments both will increase Equity; Net loss and owner's withdrawals will both decrease Equity.

    In the three different scenarios you're told about the owner's investments or withdrawals. The net income or loss is whatever amount explains the rest of the overall change in Equity. Take it from here?
    algir89's Avatar
    algir89 Posts: 2, Reputation: 1
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    #3

    Aug 18, 2010, 01:21 PM

    Yes, thank you so much!
    ArcSine's Avatar
    ArcSine Posts: 969, Reputation: 106
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    #4

    Aug 18, 2010, 02:55 PM
    I'm glad it helped.
    mplante88's Avatar
    mplante88 Posts: 2, Reputation: 1
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    #5

    Sep 8, 2010, 10:14 AM

    I'm still having a tough time getting it. Read this, and tried to figure it out but I'm still stuck. Blah
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #6

    Sep 8, 2010, 12:01 PM

    Where are you stuck?
    mplante88's Avatar
    mplante88 Posts: 2, Reputation: 1
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    #7

    Sep 8, 2010, 01:39 PM
    Never mind... Instructor cancelled that part of the assignment.
    mccar12's Avatar
    mccar12 Posts: 1, Reputation: 1
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    #8

    Oct 22, 2010, 12:10 PM
    I still don't understand this question either
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