Question

During 2013, Bascom Bakery paid out $33,525 of common dividends. It ended the year with $197,500 of retained earnings versus the prior year's retained earnings of $159,600. How much net income did the firm earn during the year? a. $86,818 b. $78,746 c. $71,425 d. $82,683 e. $74,996

Answer 1

Answer:

Explanation:

RETAINED EARNINGS AT THE END OF THE YEAR = RETAINED EARNINGS IN THE BEGINNING + NET INCOME FOR THE YEAR - DIVIDEND PAID

197500 = 159600 + NET INCOME -33525

NET INCOME = 197500 - 159600 + 33525 = 71425

Answer is C