The Shore Company has sent you a puzzle to solve. They heard you love puzzles. T

ID: 2337083 • Letter: T

Question

The Shore Company has sent you a puzzle to solve. They heard you love puzzles. The pieces for the puzzle are:

a. Assets on Aug 1, 2013 $ 732,000

b. Assets in Aug 31, 2013 1,005,000

c. Liabilities on Aug 1, 2013 442,000

d. Liabilities on Aug 31, 2013 685,000

e. During the month of August 2013, the owners invested an additional $85,000 into the company.

f. During the month of August 2013, the owners withdrew $40,000 from the company.

calculate the net income for the company during the month of August. Show your work.

Answer:

Stockholder's Equity/Owners' capital = Assets - Liabilities

As such:

Stockholder's Equity/Owners' capital as on Aug 1, 2013 = $732,000 - $442,000 = $290,000

Stockholder's Equity/Owners' capital as on Aug 31, 2013 = $1,005,000 - $685,000 = $320,000

Let us assume net income during the month of Aug 2013 = X

During the month owners invested additional $85,000 and withdrawn $40,000

Hence:

$290,000 + X + $85,000 - $40,000= $320,000

=> X + $335,000 =$320,000

=> X = - $15,000

Net income/(loss) for the company during the month of August = - $15,000

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