Presented below are changes in the account balances of Al-Othman Company during

Question

Presented below are changes in the account balances of Al-Othman Company during the year, except for Retained Earnings.   The only entries in Retained Earnings were for net income and dividends. Al-Othman declared dividends of $8,250 and paid dividends of $11,000 during the year. Calculate Net Income.

Account Change during year Cash $81,000 Accounts payable 34,000 Accounts receivable (net) 30,000 Accrued Expenses 27,000 Accumulated OCI -19,000 Additional paid-in capital 16,000 Bonds payable -20,000 Common stock 72,000 Held-to-Maturity Bonds -15,000 Inventory 42,000 Long Term Prepaids 21,000 Non controlling Interest -2,000 Plant Assets (net) -25,000 Unearned Revenues -13,000

Explanation / Answer

Change in assets Change in Liabilities Cash 81000 Accounts payable 34,000 Accounts receivable (net) 30,000 Accrued Expenses 27,000 Inventory 42,000 Accumulated OCI -19,000 Long Term Prepaids 21,000 Held-to-Maturity Bonds -15,000 Plant Assets (net) -25,000 Bonds payable -20,000 Unearned Revenues -13,000 Total change 134000 9000 Net Change in Assets & liabilities 125000 Less: Change in Equity Common stock 72,000 Additional paid-in capital 16,000 88,000 Add: Non controlling Interest -2,000 86,000 86000 Net change (125000-86000) 39000 Add: dividends paid during the year 11,000 Net Income for the year 50,000

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