The December 31, Year 1, balance sheet for Deen Company showed total stockholder

Question

The December 31, Year 1, balance sheet for Deen Company showed total stockholders' equity of $65,500. Total stockholders' equity increased by $33,000 between December 31, Year 1, and December 31, Year 2. During Year 2, Deen Company acquired $13,500 cash from the Issue of common stock. Deen Company paid a $6,000 cash dividend to the stockholders during Year 2 Required Determine the amount of net income or loss Deen reported on its Year 2 income statement. (Hint Remember that stock issues, net Income, and dividends all change total stockholders' equity et income

Explanation / Answer

Stockholder's Equity on December 31,Year 2 =Stockholder's Equity on December 31,Year 1 + Net income - Dividends + Shares Issued

Net Income = Stockholder's Equity on December 31,Year 2 - Stockholder's Equity on December 31,Year 1 + Dividends - Shares Issued

= ( $ 33,000 + $ 65,500) - $ 65,500 + $ 6000 - $ 13,500

= $ 25,500

Hence the correct answer is $ 25,500

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