12/31/X3
Total assets = $750,000
Total liabilities = $300,000
12/31/X2
Total assets = $520,000
Total liabilities = $200,000
There were no stock transactions in 20X3 and thus the change in stockholders' equity for 20X3 was due to net income and dividends. If dividends were $30,000, how much was the net income for 20X3?
The answer is $160,000... but I have no idea how the book got to that answer...
Someone help me please. Thank you.
2007-01-17 13:10:15 · 4 answers · asked by Rita 3 in Business & Finance ➔ Other - Business & Finance
This is for school...............
2007-01-17 13:15:14 · update #1
The stock equity was 450,000 for 20X3 and 320,000 for 20X2. So the difference is 130,000. The dividend will reduce the the stockholder's quity and net income increase it. So the net income must be 160,000.
20X2 stockholder's equity + net income of 20X3 - dividend 20X3=20X3 stockholder's equity
Replace these terms with numbers, you get:
320,000+net income of 20X3 - 30,000=450,000
So the net income of 20X3 is 160,000.
2007-01-17 13:20:43 · answer #1 · answered by zhifa 2 · 2⤊ 0⤋
Assets = Liabilities + Owners' Equity
Ending Owners Equity = Beginning Owners Equity + Net Income to Common Shareholders - Dividends +/- Other Stock Transactions
Beginning Owners' Equity = $320k ($520k assets - $200k liabilities in X2).
Net Income = "X"
Dividends = $30k
Ending Owners' Equity = $450k ($750k assets - $300k liabilties in X3).
Other Stock Transactions = $0 (as defined by question)
$320k + X - $30k + 0 = $450k
X = $450k - $320k + $30k
X = $160k
2007-01-17 13:47:39 · answer #2 · answered by csanda 6 · 1⤊ 0⤋
Dividend is the return you pay out to the stockholders, thus it decrease your net income in the statement of retained earnings.
Given in the question, the dividend is $30,000 and the closing balance in retained earnings for the year is $130,000, thus the statement of the retained earnings should be
Net income = $x
less dividend = $30,000
----------------------------------------------------------------------------
retained earnings for the year = $130,000
There you can find the total net income before the deduction of dividend which is 130,000 + 30,000 = $160,000
2007-01-17 15:05:59 · answer #3 · answered by arthemisme 2 · 0⤊ 0⤋
why don't you pay a good cpa a few bucks and let them do it for you..........I can't understand why people want to do their own taxes, do you know how many tax law changes there are each year????????? the accountants are lucky to keep up with them
2007-01-17 13:13:54 · answer #4 · answered by besthusbandever 4 · 0⤊ 1⤋