As of December 31, 2018, Foxfire Company had assets of $2,775,000 and liabilities of $855,000. During 2019, the stockholders invested an additional $150,000 and paid dividends of $90,000 from the business.
What is the net income for the company during 2019, assuming that as of December 31, 2019, assets were $2,940,000, and liabilities were $765,000?

Question

Quizplus · Accepted Answer

Stockholders' equity 12/31/18 = Assets - Liabilities
X = $2,775,000 - $855,000
X = $1,920,000 = Stockholders' equity 12/31/18
Stockholders' equity 12/31/19 = Assets - Liabilities
X = $2,940,000 - $765,000
X = $2,175,000 = Stockholders' equity 12/31/19
Stockholders' equity 12/31/19 = Stockholders' equity 12/31/18 + Additional equity investments + Net income - Dividends
$2,175,000 = $1,920,000 + $150,000 + X - $90,000
X = $2,175,000 - $1,920,000 - $150,000 + $90,000
X = $195,000 = Net income

As of December 31, 2018, Foxfire Company Had Assets of $2,775,000