#### Net Income Calculation ProblemAs of the end of its accounting period, December 31, Year 1, Great Plains Company has assets of $925,191 and liabilities of $276,557. During Year 2, stockholders invested an additional $28,156 and received $25,951 in dividends from the business. What is the amount of net income during Year 2, assuming that as of December 31, Year 2, assets were $989,567 and liabilities were $235,540?**Options:** - a. $25,951 - b. $103,188 - c. $64,376 - d. $41,017To solve this problem, let’s break it down step by step:1. **Determine the Equity at the End of Year 1:** \[ \text{Equity}_{\text{Year 1}} = \text{Assets}_{\text{Year 1}} - \text{Liabilities}_{\text{Year 1}} \] \[ \text{Equity}_{\text{Year 1}} = 925,191 - 276,557 = 648,634 \]2. **Determine the Equity at the End of Year 2:** \[ \text{Equity}_{\text{Year 2}} = \text{Assets}_{\text{Year 2}} - \text{Liabilities}_{\text{Year 2}} \] \[ \text{Equity}_{\text{Year 2}} = 989,567 - 235,540 = 754,027 \]3. **Calculate the Change in Equity during Year 2:** \[ \text{Change in Equity} = \text{Equity}_{\text{Year 2}} - \text{Equity}_{\text{Year 1}} \] \[ \text{Change in Equity} = 754,027 - 648,634 = 105,393 \]4. **Account for Stockholder Investments and Dividends:** \[ \text{Net Income}_{\text{Year 2}} = \text{Change in Equity} - \text{Additional Investments} + \text{Dividends Paid} \]

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Description: #### Net Income Calculation ProblemAs of the end of its accounting period, December 31, Year 1, Great Plains Company has assets of $925,191 and liabilities of $276,557. During Year 2, stockholders invested an additional $28,156 and received $25,951

The accounting equation states that assets equal to sum of liabilities and equity. Assets =…

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As of the end of its accounting period, December 31, Year 1, Great Plains Company has assets of $925,191 and liabilities of $276,557. During Year 2, stockholders invested an additional $28,156 and received $25,951 in dividends from the business. What is the amount of net income during Year 2, assuming that as of December 31, Year 2, assets were $989,567 and liabilities were $235,540? Oa. $25,951 Ob. $103,188 Oc. $64,376 Od. $41,017

As of the end of its accounting period, December 31, Year 1, Great Plains Company has assets of $925,191 and liabilities of $276,557. During Year 2, stockholders invested an additional $28,156 and received $25,951 in dividends from the business. What is the amount of net income during Year 2, assuming that as of December 31, Year 2, assets were $989,567 and liabilities were $235,540? Oa. $25,951 Ob. $103,188 Oc. $64,376 Od. $41,017

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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