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I need help in how to calculate net income. What gets added / subtracted to calculate it? An example was the question: The comparative balance
I need help in how to calculate net income. What gets added / subtracted to calculate it?
An example was the question: The comparative balance sheet of Olson-Jones Industries Inc. for December 31, 20Y2 and 20Y1, is as follows:
Dec. 31, 20Y2 | Dec. 31, 20Y1 | ||||
Assets | |||||
Cash | $183 | $14 | |||
Accounts receivable (net) | 55 | 49 | |||
Inventories | 117 | 99 | |||
Land | 250 | 330 | |||
Equipment | 205 | 175 | |||
Accumulated depreciationequipment | (68) | (42) | |||
Total assets | $742 | $625 | |||
Liabilities and Stockholders' Equity | |||||
Accounts payable (merchandise creditors) | $51 | $37 | |||
Dividends payable | 5 | - | |||
Common stock, $1 par | 125 | 80 | |||
Paid-in capital: Excess of issue price over parcommon stock | 85 | 70 | |||
Retained earnings | 476 | 438 | |||
Total liabilities and stockholders' equity | $742 | $625 |
The following additional information is taken from the records:
- Land was sold for $120.
- Equipment was acquired for cash.
- There were no disposals of equipment during the year.
- The common stock was issued for cash.
- There was a $62 credit to Retained Earnings for net income.
- There was a $24 debit to Retained Earnings for cash dividends declared.
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