Jerry's Butcher Shop had the following assets and liabilities at the beginning and end of the current year:Assets LiabilitiesBeginning of the year $114,000 $68,000End of the year 135,000 73,000If there were no stockholder investments in the business but the company paid $5,000 in dividends during the year, what was the amount of net income earned by Jerry's Butcher Shop?
What will be an ideal response?
Beginning equity = $114,000 ? $68,000 = $46,000
Ending equity = $135,000 ? $73,000 = $62,000
Increase in equity = $62,000 ? $46,000 = $16,000
Net income = $16,000 + $5,000 = $21,000
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