The accounts of Odie Company with the increases or decreases that occurred during the past year are as follows:Account Increase DecreaseCash $25,000Accounts receivable $(5,000)Accounts payable (11,000)Notes payable 16,000Except for net income, an investment of $3,000 by its sole stockholder in exchange for common stock, and a dividend of $11,000 to its stockholder, no other items affected equity. Using the balance sheet equation, compute net income for the past year.
What will be an ideal response?
$23,000
Feedback: Assets = Liabilities + Equity
Assets Increased by $20,000; Liabilities Increased by $5,000; Therefore, Equity needs to Increase by $15,000.
Change in Equity = Stockholder Investments + 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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