Question

A. owner made no investments in the business, and no dividends were paid during the year.
b. owner made no investments in the business, but dividends were $1,250 cash per month.
c. no dividends were paid during the year, but the owner did invest an additional $55,000 cash in exchange for common stock.
d. dividends were $1,250 cash per month, and the owner invested an additional $35,000 cash in exchange for common stock. determine the net income earned or net loss incurred by the business during the year for each of the above separate cases: (decreases in equity should be indicated with a minus sign.)

Answer 1

Answer:

the first part of the question is missing:

                                   Assets  Liabilities

Beginning of the year $57,000  $24,436        

End of the year        $115,000  $46,575  

equity = assets - liabilities

beginning = $57,000 - $24,436 = $32,564

ending = $115,000 - $46,575 = $68,425

                                                       a        b        c      d

Beginning of the year equity  $32,564   $32,564   $32,564   $32,564

Owner investments          0            0           $55,000   $35,000

Dividends ($1,250 x 12)                 0   ($15,000)      0      ($15,000)

Net income (loss)                     $35,861    $50,861    ($19,139)   $15,861

End of the year equity             $68,425   $68,425   $68,425   $68,425

net income = end equity + dividends - investments - beginning equity