Abbie Marson is the sole owner and operator of Great Plains Company. As of the end of its accounting period, December 31, Year 1, Great Plains Company has assets of $908,100 and liabilities of $267,845. During Year 2, Marson invested an additional $28,658 and withdrew $25,871 from the business. What is the amount of net income during Year 2, assuming that as of December 31, Year 2, assets were $980,279 and liabilities were $233,892?

a. $33,953.

b. $103,345.

c. $25,871.

d. $72,179.

Question

Elle Sexton

Business

3 January, 05:56

Abbie Marson is the sole owner and operator of Great Plains Company. As of the end of its accounting period, December 31, Year 1, Great Plains Company has assets of $908,100 and liabilities of $267,845. During Year 2, Marson invested an additional $28,658 and withdrew $25,871 from the business. What is the amount of net income during Year 2, assuming that as of December 31, Year 2, assets were $980,279 and liabilities were $233,892?

a. $33,953.

b. $103,345.

c. $25,871.

d. $72,179.

+4

Answers (1)

Know the Answer?

Ahmed Malone · Answer 1

b. $103,345

Explanation:

Assets = Liabilities + Owner's Equity

Owner's Equity (Year 1) = $908,100 - $267,845

= $640,255

Owner's Equity (Year 2) = $980,279 - $233,892

= $746,387

increase in Owner's Equity = Owner's Equity (Year 2) - Owner's Equity (Year 1)

= $746,387 - $640,255

= $106,132

Net income during Year 2 = Increase in Owner's Equity - Additional investment + Withdrawals

= $106,132 - $28,658 + $25,871

= $103,345

Therefore, the amount of net income during Year 2 is $103.345.