Textbook Problem

Net income and stockholders’ equity for four businesses

Four different corporations, Amber, Blue, Coral, and Daffodil, show the same balance sheet data at the beginning and end of a year. These data, exclusive of the amount of stockholders’ equity, are summarized as follows:

	Total Assets	Total Liabilities
Beginning of the year	$1,220,000	$ 990,000
End of the year	1,730,000	1,150,000

On the basis of the preceding data and the following additional information for the year, determine the net income (or loss) of each company for the year. (Hint: First, determine the amount of increase or decrease in stockholders’ equity during the year.)

    Amber.    No additional common stock was issued and no dividends were paid.

    Blue:    No additional common stock was issued, but dividends of $60,000 were paid.

    Coral:    Additional common stock of $140,000 was issued, but no dividends were paid.

    Daffodil:    Additional common stock of $140,000 was issued and dividends of $60,000 were paid