What amount of net income did the business earn

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The president of the business also serves as the chair of its board of directors. After you have determined net income for 2007 based on the balance sheet in Figure 8-1, the president tells you that he thinks $200,000 cash dividends were paid to shareowners during 2007. Based on this additional information about cash dividends, what amount of net income did the business earn in 2007?

Balance Sheets at Year-Ends 2006 and 2007

Assets

2006

2007

Changes

Cash

$700,000

$901,000

$201,000

Accounts Receivable

$500,000

$535,000

$35,000

Inventory

$780,000

$825,000

$45,000

Prepaid Expenses

$110,000

$125,000

$15,000

Current Assets

$2,090,000

$2,386,000

 

Property, Plant, & Equipment

$2,450,000

$2,875,000

$425,000

Accumulated Depreciation

($685,000)

($876,000)

($191,000)

Cost Less Depreciation

$1,765,000

$1,999,000

 

Total Assets

$3,855,000

$4,385,000

 

Liabilities & Owners' Equity

     

Accounts Payable

$350,000

$385,000

$35,000

Accrued Expenses Payable

$165,000

$205,000

$40,000

Short-term Notes Payable

$500,000

$625,000

$125,000

Current Liabilities

$1,015,000

$1,215,000

 

Long-term Notes Payable

$1,000,000

$1,125,000

$125,000

Owners Equity:

     

Capital

     

Reference no: EM13535099

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