The accounts of Odie Company with the increases or decreases that occurred during the past year are as follows: AccountIncreaseDecreaseCash$25,000Accounts receivable$(5,000)Accounts payable(11,000)Notes payable16,000Except for net income, an investment of $3,000 by stockholders, and a cash dividend of $11,000 to stockholders, no other items affected stockholders' equity. Using the balance sheet equation, compute net income for the past year.
What will be an ideal response?
$23,000
Assets = Liabilities + Stockholders' Equity
Assets Increased by $20,000; Liabilities Increased by $5,000; Therefore, Equity needs to Increase by $15,000.
Change in Equity = Contributed Capital + Net Income - Dividends
Increase of $15,000 = $3,000 + Net Income - $11,000
$15,000 = Net Income - $8,000
Net Income = $23,000
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