A company reported the following asset and liability balances at the end of 2013 and 2014: $$\begin{array} { l r r }
& \underline { 2013 } & \underline { 2014 } \
\text { Assets } & \$ 150,000 & \$ 180,000 \
\text { Liabilities } & \$ 70,000 & \$ 80,000
\end{array}$$ If the company paid dividends totaling $5,000, what is the amount of net income for 2014?
A) $20,000.
B) $105,000.
C)$80,000.
D)$25,000.

Question

A company reported the following asset and liability balances at the end of 2013 and 2014: $$\begin{array} { l r r } 
& \underline { 2013 } & \underline { 2014 } \
\text { Assets } & \$ 150,000 & \$ 180,000 \
\text { Liabilities } & \$ 70,000 & \$ 80,000
\end{array}$$ If the company paid dividends totaling $5,000, what is the amount of net income for 2014?
A) $20,000.
B) $105,000.
C)$80,000.
D)$25,000.

Quizplus · Accepted Answer

The change in equity from 2013 to 2014 is $40,000 ($180,000 - $70,000) - ($150,000 - $70,000)). Adding back the $5,000 dividends gives a net income of $25,000.

A Company Reported the Following Asset and Liability Balances at the End