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    TexasJimbo's Avatar
    TexasJimbo Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Sep 16, 2008, 10:28 AM
    Calculating net income with only account balance changes
    I have the following:

    Account balance changed for 2008:

    Assets - increase 400K
    Liabilities - increase 150K
    Capital Stock - increase 120K
    Add'l paid-in capital - increase 110K

    They also paid out 20,000 in dividends and assume no other changes to retained earnings, what is net income?

    It is all the problem gives and it is in a textbook, so it is a pretty safe assumption it can be done.
    AdamUTsel's Avatar
    AdamUTsel Posts: 100, Reputation: 2
    Junior Member
    		  
    #2

    Sep 16, 2008, 12:19 PM
    Net Income should equal $40k.

    Use A = L + OE to solve

    400 = 150 + OE
    250 = OE

    Owners Equity Changes

    Capital Stock 120
    APIC 110
    Dividends paid (20)
    Net Income XX
    = 250

    xx = 40.
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