Question

Skysong, Inc. began the year with retained earnings of $105000. During 2022, the company issued $79500 of common stock for cash. The company recorded revenues of $748000, expenses of $637000, and paid dividends of $36000. What was Skysong's net income for the year 2022?

Answer 1

Answer:

Net Income for the 2022 was $111,000.

Explanation:

Net Income also known as Profit After Tax is calculated by taking Revenue and deducting all the expenses, interest, and corporation taxes. In this case, Revenue less Expenses is your Net Income.

⇒ Net Income = 748,000 - 637,000 = $111,000.

This Amount goes to Retained Earnings and then the Dividends are Paid from the Retained Earnings.

The Issuance of Common Stock has nothing to do with the Net Income. Same is the case with Dividends.

Thanks!                    

Answer 2

Answer:

$111,000

Explanation:

Net income is the difference between a company's revenue/sales and expenses for the period. The dividend paid is not considered in the determination of net income however, this affects the retained earnings of the entity.

Hence, mathematically

Net income

= Revenue - Expenses

= $748,000 - $637,000

= $111,000