Four different corporations, Jupiter, Mars, Saturn, and Venus, show the same balance sheet data at the beginning and end of a year. These data, exclusive of the amount of stockholders’ equity, are summarized as follows:
Total Assets | Total Liabilities
Beginning of the year $550,000 | $215,000
End of the year 844,000 | 320,000
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. (Hint: First determine the amount of increase or decrease in stockholders’ equity during the year.)
Jupiter: No additional common stock was issued and no dividends were paid.
Mars: No additional common stock was issued, but dividends of $36,000 were paid.
Saturn: Additional common stock of $60,000 was issued, but no dividends were paid.
Venus: Additional common stock of $60,000 was issued and dividends of $36,000 were paid.
Answer:
Jupiter
Stockholders’ equity at end of year ($844,000 – $320,000)…………………… $524,000
Deduct stockholders’ equity at beginning of year ($550,000 – $215,000)… 335,000
Net income (increase in stockholders’ equity)……………………………… $189,000
Mars
Increase in stockholders’ equity (as determined for Jupiter)………………… $189,000
Add dividends………………………………………………………………………… 36,000
Net income………………………………………………………………………… $225,000
Saturn
Increase in stockholders’ equity (as determined for Jupiter)………………… $189,000
Deduct additional issuance of common stock………………………………… 60,000
Net income………………………………………………………………………… $129,000
Venus
Increase in stockholders’ equity (as determined for Jupiter)………………… $189,000
Deduct additional issuance of common stock………………………………… 60,000
$129,000
Add dividends………………………………………………………………………… 36,000
Net income………………………………………………………………………… $165,000
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