Question

Four different corporations, Amber, Blue, Coral, and Daffodil, show the same balance sheet data at at the beginning and end of a year. These data, exclusive of the amount of stockholders' equity, arere summarized as follows:
Total Assets Total Liabilities
Beginning of the year $1,220,000 $990,000
End of the year 1,730,000 1,150,000
On the basis of the preceding data and the following additional information for the year, determine the net income (or loss) of each company for the year. (First determine the amount of increase or decrease in stockholders' equity during the year).
Amber: No additional common stock was issued and no dividends were paid.
Blue: No additional common stock was issued, but dividends of $60,000 were paid.
Coral: Additional common stock of $140,000 was issued, but no dividends were paid.
Daffodil: Additional common stock of $140,000 was issued and dividends of $60,000 were paid.

Answer 1

Answer:

Amber

Change in stockholders' equity = $580,000 - $230,000 = $350,000

No additional shares issued, so net income = $350,000

Blue

Change in stockholders' equity = $580,000 - $230,000 = $350,000

No additional shares issued, but dividends paid for $60,000, so net income = $410,000

Coral

Change in stockholders' equity = $580,000 - $230,000 = $350,000

Additional shares issued for $140,000, so net income = $210,000

Daffodil

Change in stockholders' equity = $580,000 - $230,000 = $350,000

Additional shares issued for $140,000, dividends paid for $60,000, so net income = $270,000