Question

If beginning retained earnings was $70,000, ending retained earnings was $88,000, and cash dividends in the amount of $21,000 were declared and paid, the amount of net income or net loss was?

Answer 1

Answer:

Net income = $39,000

Explanation:

The computation of the amount of net income or net loss is presented below:

As we know that

The ending balance of retained earning = Beginning balance of retained earnings + net income or net loss - cash dividend paid

$88,000 = $70,000 + net income or net loss - $21,000

$88,000 = $49,000 + net income or net loss

So, the net income is

= 88,000 - $49,000

= $39,000