Exercise 41 Presented below are changes in all the account b

Exercise 4-1

Presented below are changes in all the account balances of Oriole Furniture Co. during the current year, except for retained earnings. Increase (Decrease) Increase (Decrease) Cash $69,400 Accounts Payable $(51,080 ) Accounts Receivable (net) 49,700 Bonds Payable 83,640 Inventory 128,900 Common Stock 132,600 Investments (48,080 ) Paid-In Capital in Excess of Par—Common Stock 15,730 Compute the net income for the current year, assuming that there were no entries in the Retained Earnings account except for net income and a dividend declaration of $24,570 which was paid in the current year.




Net income $ ......... ??

Solution

Oriole Furniture Co. Computation of net income Change in assets (69,400 + 49,700 +128,900 - 48,080) $199,920 increase Change in liabilities(83,640 - 51,080) 32,560 increase Change in Stockholders’ equity $167,360 increase Change in stockholders’ equity: Net increase $167,360 Increase in common stock $132,600   Increase in additional paid in capital 15,730   Decrease in retained earnings(dividenddeclaration) (24,570) Net increase accounted for 123,760 Increase in retained earnings (net income) $43,600