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Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition by Donald E. Kieso, Paul D. Kimmel, Jerry J. Weygandt

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EXERCISE 1-5

Purpose: (L.O. 6, 7, 8) This exercise reviews the basic accounting equation (A = L + SE) and the connection between the income statement and the balance sheet. The connection is a change in stockholders' equity during a period due to the net income or net loss for the period.

The following data were extracted from the records of Handy Hernanco Corporation:

Total assets, beginning of the period $250,000
Total liabilities, beginning of the period 90,000
Dividends declared and paid during the period 75,000
Total assets, end of the period 270,000
Total liabilities, end of the period 95,000
Sale of additional stock during the period 25,000

Instructions

Compute the amount of net income (or net loss) for the period. Show your computations.

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