At the end of 2013. Crandall Company reported the following amounts on its balan

Question

At the end of 2013. Crandall Company reported the following amounts on its balance sheet: Answer each of the following independent questions: Assume that Crandall's stockholders' equity on January 1, 2013 was $132,000. Crandall did not issue common stock during the year, but it paid $18,000 cash in dividends How much is Crandall s net income or loss for 2013? Assume that Crandall s stockholders' equity on January 1, 2013 was $118,000, and that Crandall issued additional common stock of $35,000 and paid $30,000 in cash dividends before the end of 2013 What was Crandall's net income or net loss for 2013?

Explanation / Answer

Retained earning at beginning of 2013 = 132000 - 95000 = 37000

Net income = RE at end +dividend paid -RE at beginning

                    = 60000 +18000 - 37000

                    = 41000

b)Common stock outstanding at beginning = 95000- 35000 = 60000

RE at beginning = 118000 -60000 = 58000

Net income = 60000 + 30000-58000

                  = $ 32000

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