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  • Aug 28, 2013, 10:26 AM
    jgraeff
    Find net income
    I need some help

    The following financial statement information is from five separate companies.

    Company
    A Company
    B Company
    C Company
    D Company
    E
    December 31, 2009
    Assets $ 55,000 $ 34,000 $ 24,000 $ 60,000 $ 119,000
    Liabilities 24,500 21,500 9,000 40,000 ?
    December 31, 2010
    Assets 58,000 40,000 ? 85,000 113,000
    Liabilities ? 26,500 29,000 24,000 70,000
    During year 2010
    Owner Investments 6,000 1,400 9,750 ? 6,500
    Net Income 8,500 ? 8,000 14,000 20,000
    Owner cash withdrawals 3,500 2,000 5,875 0 11,000

    For company b

    (a) What is the amount of equity on December 31, 2009? 12,500


    (b) What is the amount of equity on December 31, 2010? 13.500


    (c) What is net income for year 2010??

    I'm not sure how to find this can someone help?
  • Aug 28, 2013, 11:18 AM
    pready
    The formula for calculating changes in owners equity is:

    Beginning owners equity + owners investments (or Stock issuances) + Net Income - Owners Cash Withdrawals (or Cash Dividends) = Ending Owners Equity

    This formula can be used to find Net Income by simply rearranging the known amounts to solve for the unknown amount. So the formula becomes:

    Net Income = Ending Owners Equity (2010) - Beginning Owners Equity (2009) - Owners Investments + Owners Cash Withdrawals
  • Aug 29, 2013, 07:30 AM
    jgraeff
    Thanks a lot I have another one
    Calculate the amount of assets for Company C on December 31, 2010

    Liabilites dec 31, 2010 : $29,000
    Equity: ?
    Assets:?

    Could you also provide the formulas needed to find each for accounting? Our book doesn't have any and I'm totally lost trying to find these.
    Thanks for your help
  • Aug 29, 2013, 07:41 AM
    pready
    You should start with Owners Equity at 31 Dec 2009, add Owners Investments, add Net Income, and subtract Owners Cash Withdrawals during 2010 to get your Owners Equity at 31 Dec 2010.

    Now add your Liabilities at 31 Dec 2010 and Equity at 31 Dec 2010 to get your Assets at 31 Dec 2010.

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