Respuesta :
Answer:
The net income for Year 2 is $ 114,482
Explanation:
Accounting Equation is used in order to calculate the closing capital figure of Year 1 and Year 2:
Assets=Liabilities + Equity.
we can rearrange the formula as Assets-Liabilities = Equity
- So in Year 1. the closing capital is: $910,049-$274,794 = $635,255.
- In Year 2. the closing capital is : $988,160-$234,792 = $ 753,368
Now we can construct an equation to drive net income of year to by means of balancing figure:
Opening capital year 1: $635,255
+ Additional Capital in Year 2: $28,651
-Drawing in year 2: $(25,020)
Net Income(Balancing figure) $114,482
Closing Capital Year 2: $ 753,368
Answer:
$114,482
Explanation:
The accounting equation shows the relationship between the various elements of the balance sheet. These are the assets, liabilities and equity. It may be expressed mathematically as
Assets = Liabilities + Equity
As such, for Great Plains Company as at December 31, Year 1
Equity = $910,049 - $274,794
= $635,255
As at December 31, Year 2
Equity = $988,160 - $234,792
= $753,368
Change in equity between year 1 and 2
= $753,368 - $635,255
= $118,113
This difference or change in equity between December 31, year 1 and 2 is as a result of the following;
- amount withdrawn by the owner
- Additional amount invested by the owner
- Net income/loss of the business in year 2
As such,
$118,113 = $28,651 - $25,020 + net income
Net income = $118,113 - $28,651 + $25,020
= $114,482