Task:
Articulation: Relationships between a Balance Sheet and an Income Statement
The total assets and liabilities of Roloflex Company at January 1 and December 31, 2006, are presented below.
January 1 December 31
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $76,000 $112,000
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,000 28,800
Determine the amount of net income or loss for 2006, applying each of the following assumptions concerning the additional issuance of stock and dividends paid by the firm. Each case is independent of the others.
1. Dividends of $10,800 were paid and no additional stock was issued during the year.
2. Additional stock of $4,800 was issued and no dividends were paid during the year.
3. Additional stock of $62,000 was issued and dividends of $15,600 were paid during the year.