Stockholders' Equity and the Accounting Equation
Daiichi Company's total assets and liabilities at the beginning and end of the year follow.
|
Assets |
Liabilities |
| Beginning of the year |
$175,000 |
$ 68,750 |
| End of the year |
275,000 |
162,500 |
Determine Daiichi's net income or loss for the year under each of the following alternatives:
1. No common stock was issued, and no dividends were paid during the year.
2. No common stock was issued, but Daiichi paid $27,500 in dividends during the year.
3. Common stock of $16,250 was issued, but no dividends were paid during the year.
4. Common stock of $12,500 was issued, and Daiichi paid dividends of $27,500 during the year.