The following changes in Vel Corp.'s account balances occurredduring the current year:Increase Assets $...The...

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Accounting

The following changes in Vel Corp.'s account balances occurredduring the current year:
Increase Assets $ 89,000
Liabilities27,000
Capital stock 60,000
Additional paid-in capital 6,000
Except for a $13,000 dividend payment and the year's earnings,there were no changes in retained earnings for the current year.What was Vel's current year net income?

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4.3 Ratings (643 Votes)

All working forms part of the answer
First, we need to calculate total Equity Balance:

A	Assets	$ 89,000.00
B	Liabilities	$ 27,000.00
C = A - B	Equity	$ 62,000.00

Equity contains Common Stock, additional paid in capital and Retained Earnings.

Workings and Answer

A	Capital Stock	$ 60,000.00
B	Additional Paid in capital	$ 6,000.00
C = A + B	Total Equity (without Retained Earnings)	$ 66,000.00
D	Equity [calculated above]	$ 62,000.00
E = C - D	Retained earnings balance	$ (4,000.00)
F	Dividends paid	$ 13,000.00
G = E + F	Net Income for Current Year	$ 9,000.00

Correct Answer = $ 9,000 = NET INCOME

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In: AccountingThe following changes in Vel Corp.'s account balances occurredduring the current year:Increase Assets $...The following changes in Vel Corp.'s account balances occurredduring the current year:Increase Assets $ 89,000Liabilities27,000Capital stock 60,000Additional paid-in capital 6,000Except for a $13,000 dividend payment and the year's earnings,there were no changes in retained earnings for the current year.What was Vel's current year net income?