Question

The changes in account balances for allen inc. for 2018 are as follows:

Assets $225,000 debit
Common stock $125,000 credit
Liabilities 80,000 credit
Paid-in capital—excess of par 15,000


Assuming the only changes in retained earnings in 2018 were for net income and a $25,000 dividend, what was net income for 2018?

Answer 1

Answer:

$30,000

Explanation:

Given that;

[DEBITS]

Assets = $225,000 dr

Dividends = $25,000 dr

Total = $250,000 Dr

[CREDITS]

Common stock = $125,000 cr

Liabilities = $80,000 cr

Paid in capital excess of par = $15,000 cr

The net income for 2018 is calculated as;

= (Total debits - Total credits)

= ($250,000 - $125,000 - $80,000 - $15,000)

= $30,000