Exercise 1-10 Your answer is partially correct. Try again Finch Company had the
ID: 2331324 • Letter: E
Question
Exercise 1-10 Your answer is partially correct. Try again Finch Company had the following assets and liabilities on the dates indicated December 31 2016 2017 2018 Total Assets $400,000 $460,000 $590,000 Total Liabilities $250,000 $300,000 $400,000 Finch began business on January 1, 2016, with an investment of $100,000 From an analysis of the change in owner's equity during the year, compute the net income (or loss) for: (a) 2016, assuming Finch's drawings were $15,000 for the year. Net income 35000 for 2016 (b) 2017, assuming Finch made an additional investment of $45,000 and had no drawings in 2017. Net income 15000 for 2017 (c) 2018, assuming Finch made an additional investment of $15,000 and had drawings of $25,000 in 2018 Net income 55000 for 2018 LINK TO TEXT VIDEO: APPLIED SKILLSExplanation / Answer
Total assets - Total liabilties = Owner's equity
Owner's equity on December 31, 2016 = 400,000 - 250,000 = 150,000
Net Income for 2016 = Ending owner's equity - Beginning owner's equity + Drawings
= 150,000 - 100,000 + 15,000
= 65,000
Owner's equity on December 31, 2017 = 460,000 - 300,000 = 160,000
Net loss for 2017 = Ending owner's equity - Beginning owner's equity - Additional investment
= 160,000 - 150,000 - 45,000
= (35,000)
Owner's equity on December 31, 2018 = 590,000 - 400,000 = 190,000
Net Income for 2018 = Ending owner's equity - Beginning owner's equity - Additional investment + Drawings
= 190,000 - 160,000 - 15,000 + 25,000
= 40,000
Net income for 2016 65,000 Net loss for 2017 35,000 Net income for 2018 40,000Related Questions
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