Question

Baltimore Company experienced an increase in total assets of $18,500 during the current year. During the...

Baltimore Company experienced an increase in total assets of $18,500 during the current year. During the same time period, total liabilities increased $6,600. Shareholders made no investments during the year and no dividends were paid. How much was Baltimore's net income

Homework Answers

Answer #1

We know accounting equation,

Total Assets = Liabilities + Shareholders capital and Earning

Total Assets $ = Total liabilities $ + Shareholders equity and Earning $
Increase in Assets 18500 = Increase in Liabilities 6600 + Retained Earnings (balancing figure) $119000

Because Shareholders made no investment during the year and no dividend paid , therefore the difference of increase in total Assets and liabilities will shown the net income for the year and transferred to Retained Earning in Balance sheet' s Shareholder's Equity and Retained Earnings section.

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