Compute net income for 2017 by comparing total equity amounts for these two year

ID: 2330431 • Letter: C

Question

Compute net income for 2017 by comparing total equity amounts for these two years and using the following information: During 2017, the owner invested $34,000 additional cash in the business (in exchange for common stock) and the company paid $36,000 cash in dividends.

[The following information applies to the questions displayed below.]

The accounting records of Nettle Distribution show the following assets and liabilities as of December 31, 2016 and 2017.

December 31 2016 2017 Cash $ 42,759 $ 6,324 Accounts receivable 23,210 18,197 Office supplies 3,661 2,682 Office equipment 112,390 119,717 Trucks 43,980 52,980 Building 0 146,610 Land 0 36,583 Accounts payable 61,020 30,264 Note payable 0 83,193

Explanation / Answer

Calculation of Equity of Both Years :-

2016

2017

Cash

42,759

6,324

Accounts receivable

23,210

18,197

Office supplies

3,661

2,682

Office equipment

112,390

119,717

Trucks

43,980

52,980

Building

146,610

Land

36,583

(-) Accounts payable

61,020

30,264

(-) Note payable

83,193

Equity

164980

269636

Calculation of Net Income :-

Equity - 2017

269636

(-) Equity - 2016

164980

(+) Dividend

36000

(-) Additional Investment

34000

Net Income

106656