Given:
Dec. 31, 2012 Assets: $34,000, Liabilities: $24,500

Dec. 31, 2012 Assets: $40,000 Liabilities: $26,500

During 2013: Stock insurances $1,400
Net income (loss): ?
Cash dividends: $2,000\

Find net income for 2013?

What I did was: $40,000= $34,000 + $1,400 + ? - $2,000= $6,600

But I got the wrong answer... help please? I've tried everything.

I see that I did it wrong: correct answer:

13,500= 12500 + 1400 - 2000= 11900
13500 - 11900= 1600 which is the net income

First you have to find your owners equity amounts for both the beginning and ending amounts. Then you have to account for the change in the two amounts.

So to find owners equity, the formula is:
Assets - Liabilities = Owners Equity

Now for the change in owners equity the formula is:
Beginning owners equity + stock issuances + net income - cash dividends = Ending Owners Equity.

Rewritten as:
Net Income = Ending Owners Equity - Beginning Owners Equity - Stock Issuances + Cash Dividends