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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?

Answer & Explanation Solved by verified expert
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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Transcribed Image Text

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?

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