Find the Net Income/Net Loss for each company for the year Net Income and Stockh

Question

Find the Net Income/Net Loss for each company for the year Net Income and Stockholders' Equity for Four Businesses Four ditferent companies-Aries, Gemini, Leo, and Pisces, show the same balance sheet data at the beginning and end of a year. These data, exclusive of the amount of stockholders' equity, are summarized as follows: Total Liabilities 34,800 58,500 Total Assets Beginning of the year End of the year 87,000 139,200 On the basis of the preceding data and the following addtional information for the year, determine the net income (or loss) of each company for the year Arles Gemini Leo Pisces No additional capital stock was issued, and no dividends were paid No additional capital stock was issued, but dividends of $5,700 were paid Capital stock of $39,900 was issued, but no dividends were paid Capital stock of $33,100 was issued, and dividends of $6,800 were pald.

Explanation / Answer

Aries:

Since there is no additional stock, no dividends the addition to stockholders equity is net income.

Gemini:

dividends paid is a decrease to stockholders equity, hence net income = net addition to stockholders equity + dividends paid= 34200 (28500+5700)

Leo.

Since capital stock issued 39900 is more than addition to stockholders equity, it is due to net loss of= 39900- 28500= 11400

Pisces

Net addition to retained earnings= capital stock issued + net income - dividends paid

28500 = 33100 + net income - 6800

Net income= 2200

Total assets Less Total liabilities = Stockholders equity a Beginning of year 87000 -                 34,800 =                        52,200 b End of year 139200 -                 58,500 =                        80,700 c= b-a Addition to stock holders equity                        28,500

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