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Homework answers / question archive / During 2016, Smith Corporation had an increase in total assets of $70,000 and an increase in total liabilities of $90,000

During 2016, Smith Corporation had an increase in total assets of $70,000 and an increase in total liabilities of $90,000

Accounting

During 2016, Smith Corporation had an increase in total assets of $70,000 and an increase in total liabilities of $90,000. Assuming that capital stock increased by $5,000 and no dividends were paid, calculate Smith’s net income or net loss for 2016

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Answer:

Net income formula is

Net Income = Total revenue -Total expenses

In this case

Total assets = 70000

Total liabilities = 90000

Capital stock increased by = 5000

Dividends = 0

Smith Net income will be

Net Income = Total revenue -Total expenses

Asset = Liaabilities + Owners equity

70,000 = 90000 + 5000

70,000 =95000

Net income = 70000 -95000

=-25000