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    ROXY08's Avatar
    ROXY08 Posts: 4, Reputation: 1
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    #1

    Sep 1, 2013, 06:43 AM
    Figuring out Net Income
    How do I figure out net income: Here is the information I have

    December 2011

    Assets 41,000
    Liabilities 27,500

    During 2011

    Owner Investment 1,500
    Net Income ?
    Owner cash withdrawals 3,000

    Thank you in advance for any/all help!
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #2

    Sep 1, 2013, 07:17 AM
    You will need information from 2010 to answer this because you need equity.

    The formula is: Assets = Liabilities + Equity
    Which can be rewritten as:
    Equity = Assets - Liabilities

    So find your equity for 2010 and 2011

    The formula for equity is:

    Ending Equity = Beginning Equity + Stock Issuances + Net Income - Cash Dividends
    Which can be rewritten as:
    Net Income = Ending Equity - Beginning Equity - Stock Issuances + Cash Dividends
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