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The following information appeared in the financial records of the Cracker Corporation at year-end: Accounts receivable $ 23,000 Accounts...

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Accounting

The following information appeared in the financial records ofthe Cracker Corporation at year-end:

Accounts receivable$ 23,000
Accounts payable11,000
Supplies9,000
Cash8,000
Equipment138,000
Capital stock130,000

If the beginning of year balance in retained earnings is $30,000and $12,000 in dividends are paid during the year, net income forthe year was:

$18,000
$57,000
$19,000
$39,000

Answer & Explanation Solved by verified expert
3.6 Ratings (583 Votes)

CALCULATION OF TOAL ASSETS AND TOTAL LIABILITIES + CAPITAL STOCK
Assets AMOUNT
Cash $                    8,000
Account Receivable $                  23,000
Supplies $                    9,000
Equipment $              1,38,000
Total Assets $              1,78,000
Total Liabilities
Account Payable $                  11,000
Capital Stock $              1,30,000
Total of Liability and Capital Stock $              1,41,000
CALCULATION OF THE CLOSING RETAINED EARNINGS
Closing Retained Earning = Total Assets -Total Liabilities and Capital Stock
Closing Retained Earning = $ 178,000 - $ 141,000 = $                  37,000
Net Income = Clsoing Retained Earning + Dividend Paid - Opening Retained Earning
Net Income = ( $ 37,000 + $ 12,000 ) - $ $ 30,000
Net Income = $ 49,000 - $ $ 30,000
Net Income = $ 19,000
Answer = Option 3 = $ 19,000

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Transcribed Image Text

The following information appeared in the financial records ofthe Cracker Corporation at year-end:Accounts receivable$ 23,000Accounts payable11,000Supplies9,000Cash8,000Equipment138,000Capital stock130,000If the beginning of year balance in retained earnings is $30,000and $12,000 in dividends are paid during the year, net income forthe year was:$18,000$57,000$19,000$39,000

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