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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.

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This solution is comprised of a detailed explanation to determine the amount of net income or loss for 2006 by applying each of the given assumptions.

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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 ...

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