Toth Company had the following assets and liabilities on the

Toth Company had the following assets and liabilities on the dates indicated.

December 31

Total Assets

Total Liabilities

Toth began business on January 1, 2016, with an investment of $95,000 from stockholders.

From an analysis of the change in stockholders’ equity during the year, compute the net income (or loss) for:

(a) 2016, assuming Toth paid $25,000 in dividends for the year.

December 31		Total Assets		Total Liabilities
2016		$469,000		$216,000
2017		$549,000		$266,000
2018		$679,000		$366,000

Solution

(a) Owner’s equity—12/31/16 ($469,000 – $216,000) $        253,000 Owner’s equity—1/1/16              95,000 Increase in owner’s equity            158,000 Add: Dividends              25,000 Net income for 2016            183,000