Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 44

Calculate net income (or loss) using the accounting equation At the beginning of the current fiscal year, the balance sheet for Davis Co. showed liabilities of $320,000.During the year liabilities decreased by $18,000, assets increased by $65,000, and ejfbef paidin capital increased from $30,000 to $192,000. Dividends declared and paid during $25,000. At the end of the year, owners’ equity totaled $429,000.

Required:

Calculate net income (or loss) for the year.

(Hint: Set up an accounting equation for the beginning of the year, changes during the year, and at the end of the year. Enter known data and solve for the unknowns. Remember, net income[or loss] may not be the only item affecting retained earnings.)

Step 1 of 3

Computation net income/loss using accounting equation :

Accounting equation: It is the equation that is the basis of double entry of accounting system. The accounting equation is as follows:

By extracting the information: