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Calculating equity, liabilities and net income (loss)
I have a question that requires me to calculate liabilities given the following information:
Company A - Dec 2010: Assets 40000, Liabilities 32800 (I calculated equity to be $7200. I am required to calculate liabilities for Dec 2011 giving the following transactions occurred in 2011 - Assets 43000, Stock Issuance 6000, Net Income (loss) 9650 and Cash Dividends $3500. Can you help me to determine liabilities and also net income (loss) if it wasn't given |
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You've started on the right foot. You need to first account for the changes that happened to that 7200 in equity. What do the stock, net income and dividends do to equity? Use those to calculate the ending balance in equity. You can then figure out liabilities the same way you figured out the equity, by using your accounting equation. I'm just not sure if the 43,000 asset number is the new balance, or an addition. I suspect it's the new balance so that you don't have to do anything with it but plug it in. |
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Comment on morgaine300's post
Can you tell me what does the stock, net income and dividends do to equity. I suspect that the 43000 is an additional balance but I am not sure... either way, if I know how to apply the stock, net income and dividends then I might figure it out
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