Ex. 187
An analysis of the transactions made by K. T. Lang & Co., a law firm, for the month of July is shown below. Each increase and decrease in stockholders' equity is explained.
Assets = Liab. + Stockholders' Equity
Retained Earnings
Accounts Office Accounts Com
Cash +Receivable + Supplies +Equipment = Payable +Stock + Rev. - Exp. - Div.
1. +$15,000+$15,000Com, Stock
2. - 2,000+$5,000 +$3,000+ $100
3. - 750 +$750
4. + 2,500+$4,600+ $7,100Serv. Rev.
5. - 1,500- 1,500
6. - 2,500- $2,500Div.
7. - 650 - $650Rent Exp.
8. + 550 - 550
9. - 3,500 - 3,500Sal. Exp.
10. + 500 + 500- 500Util. Exp.
Instructions
(a) Determine how much stockholders' equity increased for the month.
(b) Compute the amount of net income for the month.
Ex. 188
The Lim Company had the following assets and liabilities on the dates indicated.
December 31 Total Assets Total Liabilities
2010$530,000 $250,000
2011$480,000 $210,000
2012$590,000 $300,000
Lim began business on January 1, 2010, with an investment of $100,000.
Instructions
From an analysis of the change in stockholders' equity during the year, compute the net income (or
loss) for:
(a)2010, assuming Lim paid dividends of $25,000 for the year.
(b)2011, assuming Lim made an additional investment of $60,000 and paid no dividends in 2011.
(c)2012, assuming Lim made an additional investment of $10,000 and paid dividends of $40,000 in 2012.