Question

On December 31, 2015, the net assets of Martinez Manufacturing amounted to $40,000. Net income calculated by using the financial capital maintenance concept amounted to $12,000. During the year, additional common stock was issued for $8,000, and $5,000 of dividends was paid. The net assets at January 1, 2015, amounted toa. $31,000b. $37,000c. $20,000d. $25,000

Answer 1

Answer:

d. $25,000

Explanation:

Calculate the Net Assets Available at January 1,2015.

Net Assets on Dec 31,2015 = Net Assets on Jan 1,2015 + Net Income - Dividend paid + Issued Common Stock

40000 = Net Assets on Jan 1,2015 +12000+8000-5000

Net Assets On Jan 1,2015 = $40000 - $15000 = $25,000.

Answer 2

Answer:

Do $25,000

Explanation:

Net Assets on Dec 31, 2015 = Net Assets on the January 1, 2015 + Net Income - Dividend + Issued common stock.

40,000 = Net Assets + 12,000 + 8,000 - 5,000

Net Assets on January 1, 2015 is $25,000