John Smith is the sole stockholder and operator of Just-In-Time, a consulting firm. At the end of its accounting period, December 31, 2010, Just-In-Time has assets of $375,000 and liabilities of $125,000.
Required:
Using the accounting equation and considering each case independently, determine the following amounts:
a) Stockholder's equity on 12/31/2010.
b) The amount and direction (increase or decrease) change in stockholder's equity if, during 2011, assets increased by $32,000 and liabilities decreased by $8,000.
Net income (or net loss) during 2001, assuming that as of December 31, 2011, assets were $367,000, liabilities were $110,000, capital stock of $40,000 was issued, and dividends of $60,000 were paid.