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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. Assuming that capital stock increased by $5,000 and no dividends were paid, calculate Smith’s net income or net loss for 2016
Expert Solution
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
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