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Homework answers / question archive / The Claremont Company reported the following financial results during its first two years of operations

The Claremont Company reported the following financial results during its first two years of operations

Accounting

The Claremont Company reported the following financial results during its first two years of operations.

Year End Assets = Liabilities + Shareholders' Equity
Year 1 $116,000 = $60,000 + $56,000
Year 2 125,000 = 80,000 + 45,000

Assuming that no dividends were declared and that no additional capital was invested in Year 2, determine the net income (loss) for the Claremont Company in Year 2.

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Given that the shareholders' equity at the end of year 1 was $56,000 and at the end of year 2 was $45,000

As the shareholders' equity is decreasing in the year 2, this means that Claremont Company reported a loss in the year 2.

Loss during the year 2 = $56,000 - $45,000

Loss during the year 2 = $11,000

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