CengageNOWv2 I Online teaching and learning resource from Cengage Learming Calcu

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CengageNOWv2 I Online teaching and learning resource from Cengage Learming Calculator As of the end of its accounting period, December 31, Year 1, Great Plains Company has assets of $910,637 and liabilities of $269,869. During Year 2, stockholders invested an additional $28,319 and received $25,738 in dividends from the business. What is the amount of net income during Year 2, assuming that as of December 31, Year 2, assets were $980,438 and liabilities were $231,4602 $25,738 $69,801 $105,629 $38,409 Previous Next

Explanation / Answer

Answer is 105,629

Assets as on 31 Dec year 1 = 910,637

Liabilities as on 31 Dec year 1 = 269,869

Networth as on 31 Dec year 1 = 640,768 (910637-269869)

Assets as on 31 Dec year 2 = 980,438

Liabilities as on 31 Dec year 2 = 231,460

Networth as on 31 Dec year 2 = 748,978 (980438-231460)

Increase in Networth in year 2 = 108,210 (748978-640768)

Less : Additional capital in year 2 = 28,319

Add : Dividend received in year 2 = 25, 738

Net Income earned in year 2 = 105,629

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