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16 June, 22:43

The accounting records of Nettle Distribution show the following assets and liabilities as of December 31, 2016 and 2017.

December 31 2016 2017

Cash $64,300 15,640

Accounts receivable 26,240 19,100

Office supplies 3160 1960

Office equipment 44,000 44,000

Trucks 148,000 157,000

Building 0 80,000

Land 0 60,000

Accounts payable 3,500 33,500

Note payable 0 40,000

Required:

Compute net income for 2017 by comparing total equity amounts for these two years and using the following information: During 2017, the owner invested $35,000 additional cash in the business (in exchange for common stock) and the company paid $19,000 cash in dividends.

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Answers (1)
  1. 17 June, 01:32
    0
    To calculate equity

    Total assets

    2016 2017

    Cash 64,300 15,640

    Accounts receivable 26,240 19,100

    Office supplies 3,160 1,960

    Office equipment 44,000 44,000

    Trucks 148,000 157,000

    Building 80,000

    Land 60,000

    Total 285,700 377,700

    Total liabilities

    Accounts payable 3,500 33,500

    Notes payable 40,000

    Total 3,500 73,500

    Total equity = Total assets = Total liabilities

    2016 = (285700-3500) = 282,200

    2017 = (377,700 - 73,500) 304,200

    Net income for 2017

    Total equity = 304,200

    Less additional cash invested (35,000)

    Add back dividends paid 19,000

    288,200

    Less total equity for 2016 (282,200)

    6,000
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