Exercise 104 Presented below are changes in the account balances of Wenn Company
ID: 2408058 • Letter: E
Question
Exercise 104
Presented below are changes in the account balances of Wenn Company during the year, except for retained earnings.
Increase
(Decrease)
Increase
(Decrease)
Cash
$28,540
Accounts payable
$35,860
Accounts receivable (net)
(17,130)
Bonds payable
(22,600)
Inventory
51,060
Common stock
63,010
Plant assets (net)
46,890
Paid-in capital
16,480
The only entries in Retained Earnings were for net income and a dividend declaration of $17,030.
(a)
Compute the net income for the current year.
Increase
(Decrease)
Increase
(Decrease)
Cash
$28,540
Accounts payable
$35,860
Accounts receivable (net)
(17,130)
Bonds payable
(22,600)
Inventory
51,060
Common stock
63,010
Plant assets (net)
46,890
Paid-in capital
16,480
Explanation / Answer
Increase in Assets = Increase in Cash - Decrease in Accounts Receivable + Increase in Inventory + Increase in Plant Assets
Increase in Assets = $28,540 - $17,130 + $51,060 + $46,890
Increase in Assets = $109,360
Increase in Liabilities = Increase in Accounts Payable - Decrease in Bonds Payable
Increase in Liabilities = $35,860 - $22,600
Increase in Liabilities = $13,260
Increase in Assets = Increase in Liabilities + Increase in Equity
$109,360 = $13,260 + Increase in Equity
Increase in Equity = $96,100
Increase in Equity = Increase in Common Stock + Increase in Paid-in Capital + Increase in Retained Earnings
$96,100 = $63,010 + $16,480 + Increase in Retained Earnings
Increase in Retained Earnings = $16,610
Increase in Retained Earnings = Net Income - Dividend Paid
$16,610 = Net Income - $17,030
Net Income = $33,640
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