Question

In: Accounting

In year 1, Company A has the following info in itsfinancial statements: Retained Earnings (beginning...

In year 1, Company A has the following info in its financial statements: Retained Earnings (beginning balance) of $32,000; Retained Earnings (ending balance) of $95,000; Revenue of $100,000, Expenses (including tax expense) of $30,000, and dividends declared $7,000.

What amount will be shown as Net Income in Income Statement?

$95,000

$70,000

$63,000

$77,00

Solutions

Expert Solution

Net Income = Revenue - Expenses = $100000-$30000 = $70000

Checking :

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

$95,000 = $32,000 + net income - $7,000

So, the net income is $70,000


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