Kimmel Corporation reported the following amounts for assets and liabilities at the beginning and end of a recent year. Beginning of Year End of Year Assets $231,500 $348,100 Liabilities 84,550 125,900 Calculate Kimmel’s net income or net loss for the year in each of the following independent situations (if it is a net loss, write net loss with the amount or place the amount between parentheses): Kimmel declared no dividends and its common shares remain unchanged. Kimmel declared no dividends and issued additional common shares for $12,000 cash. Kimmel declared dividends totalling $8,000, and its common shares remain unchanged. Kimmel declared dividends totalling $11,000 and issued additional common shares for $15,000.
Kimmel Corporation reported the following amounts for assets and liabilities at the beginning and end of a recent year.
|
|
Beginning of Year |
End of Year |
|
Assets |
$231,500 |
$348,100 |
|
Liabilities |
84,550 |
125,900 |
Calculate Kimmel’s net income or net loss for the year in each of the following independent situations (if it is a net loss, write net loss with the amount or place the amount between parentheses):
- Kimmel declared no dividends and its common shares remain unchanged.
- Kimmel declared no dividends and issued additional common shares for $12,000 cash.
- Kimmel declared dividends totalling $8,000, and its common shares remain unchanged.
- Kimmel declared dividends totalling $11,000 and issued additional common shares for $15,000.
Accounting equation:
This is the basic principle of accounting which reflects an entity's total assets are always equal to total liabilities and shareholders' equity. This is written as:
Total Assets = Total Liabilities + Shareholders' Equity
Situation 1: Kimmel declared no dividends and its common shares remain unchanged:
Change in shareholders' equity = $222,200-$146,950 = $75,250
Therefore, the net income for the period is $75,250.
Situation 2: Kimmel declared no dividends and issued additional common shares for $12,000 cash:
Therefore, the net income for the period is $63,250.
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