Question

Required information Problem 2-5A Computing net income from equity analysis, preparing a balance sheet, and computing the debt ratio LO C2, A1, A2, P3 [The following information applies to the questions displayed below.] The accounting records of Nettle Distribution show the following assets and liabilities as of December 31, 2018 and 2019. 2019 $ 10,460 23,108 3,405 152,029 64,851 186,181 46,460 38,433 132,641 December 31 2018 $ 54,300 Cash Accounts receivable Office supplies Office equipment 29,475 4,649 142,725 Trucks 55,851 Building Land Accounts payable Note payable 77,490 Problem 2-5A Part 2 2. Compute net income for 2019 by comparing total equity amounts for these two years and using the following information: During 2019, the owner invested $37,000 additional cash in the business (in exchange for common stock) and the company paid a $40,800 cash dividend. Docember 21 2019

Answer 1

Calculate total equity for 2018 and 2019, in the manner given below: | 2018 2019 Cash $54,300 $10,460 Accounts receivable $29,475 $23,108 Office supplies $4,649 $3,405 Office equipment $142,725 $152,029 Trucks $55,851 $64,851 Building $0 $186,181 Land $0 $46,460 Total assets (A) $287,000 $486,494 Less: Liabilities Accounts payable $77,490 $38,433 Notes payable $0 $132,641 Total liabilities (B) $77,490 $171,074 Equity shareholder's fund s209.510 S315,420 (A)-(B) Equity shareholder's fund represents common stock and retained earnings. Calculate net income for the year 2019, in the manner given below: А в Particulars Amount 2 Equity. December 31, 2018 $209,510 3 Add: Net income $109,7101 4 Add: Additional capital $37,000 $356,220 6 Less: Dividends $40,800 7 Equity. December 31, 2019 S315,420

Prepare the spreadsheet showing calculation of net income with the use of capital balances of beginning and end in the manner given below: A 1 Particulars Amount 2 Equity. December 31, 2018 209510 3 Add: Net income =B5-B2-B4 4 Add: Additional capital 37000 =B7+B6 6 Less: Dividends 40800 7 Equity. December 31, 2019 315420