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2 September, 00:44

Given the following information, determine net income. The capital balance on January 1, 2016, equals $25,000; investments and withdrawals during 2016 total $53,000 and $28,350, respectively; and the capital balance at December 31, 2016, equals $64,850.

a. $15,200

b. $41,500

c. $43,550

d. None of these choices are correct

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Answers (1)
  1. 2 September, 00:48
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    a. $15,200

    Explanation:

    As we know that

    Ending year capital balance = Beginning year capital balance + net income + investment made during the year - withdrawn during the year

    $64,850 = $25,000 + net income + $53,000 - $28,350

    $64,850 = $49,650 + net income

    So, the net income would be

    = $64,850 - $49,650

    = $15,200

    We simply added the beginning year balance, net income, investment and deduct the withdrawn amount to find out the closing year balance.
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