Lily Company had the following assets and liabilities on the dates indicated. Li

Question

Lily Company had the following assets and liabilities on the dates indicated. Lily began business on January 1, 2010, with an investment of $104,890 from stockholders. From an analysis of the change in stockholders' equity during the year, compute the net income (or loss) for: (If a net loss, record amount using either a negative sign preceding the number eg -45 or parentheses eg (45).) 2010, assuming Lily paid $14,933 in dividends for the year. $ 2011, assuming stockholders made an additional investment of $52,547 and Lily paid no dividends in 2011 $. 2012, assuming stockholders made an additional investment of $11,569 and Lily paid dividends of $32,733 in 2012. $

Explanation / Answer

a. Y2010. Owners Equity = Assets - Liability = 403850-253780 = 150070 Now Lily's equity = 104,890. So Retained earnigs = Owners Equity - Lily's equity = 150070 -104,890 = 45180 SO Net Income = Retained Earnigs + Div Paid = 45180+14,933 = $60,113 ..Ans (a) b. Y2011. Owners Equity = Assets - Liability = 457,340-297,440 = $159,900 Now Lily's equity = 104,890+52547 = $157,437 So Retained earnigs = Owners Equity - Lily's equity = 159,900 - $157,437 =2463 SO Net Income = Retained Earnigs + Div Paid = 2463+0 = $2,463 ..Ans (b) c. Y2012. Owners Equity = Assets - Liability =591,480-399,920 = $191,560 Now Lily's equity = 104,890+52547 +11569 = $169,006 So Retained earnigs = Owners Equity - Lily's equity = 191,560 - $169,006 = $22,554 SO Net Income = Retained Earnigs + Div Paid =22,554+32,733 = $55,287 ..Ans (c)

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