Question

At the beginning of the current fiscal year, the balance sheet of Moondrop Co. showed liabilities of $760,000. During the year liabilities increased by $20,000, assets increased by $110,000, and paidin capital increased by $40,000 to $330,000. Dividends declared and paid during the year were
$120,000. At the end of the year, stockholders' equity totaled $804,000. Calculate net income or loss
for the year along with the other amounts.
Required: Calculate the value of the 7 numbers.

	Assets =	Liabilities +	Paid In Capital +	Retained Earnings
Beginning	$(5) =	$760,000 +	(4)	(6)
Changes	+$110,000	+$20,000	+$40,000	(7)
Ending	(3)	(2)	$330,000	(1)

1)

2)

3)

4)

5)

6)

7)

Answer 1

Assets=Liabilities+Paid in capital+Retained Earnings

	Assets	=	Liabilities	+	Paid in Capital	+	Retained earnings
Beginning	1,474,000	=	760000	+	290,000	+	424,000
changes	110,000	=	20,000	+	40,000	+	50,000
Ending	1,584,000	=	780,000	+	330,000	+	474,000

• Ending Liabilities=Opening Liabilities+ Change

=760,000+20,000

=780,000

• Beginning Paid in Capital=Ending capital-Change

=330,000-40,000

=290,000

• Retained earning=Total Stockholders' equity-Paid in capital

=804,000-330000

=474000

• Ending assets=Total Libilities+Total Stockholders' equity

=780000+804000

=1,584,000

• Beginning Assets=Ending Assets-Change

=1,584,000-110,000

=1,474,000

Net Income:-

Change In retained earnings =50,000

Retained earning is increased due to Net Income and decrease due to Dividend paid.

Dividend paid during the year=120,000

Net Income =50,000+120,000

=$170,000

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