In: Finance
Ivan's, Inc., paid $478 in dividends and $584 in interest this past year. Common stock increased by $194 and retained earnings decreased by $120. What is the net income for the year?
Net Income $ 358
Working:
Dividend paid | $ 478 | |||||||
Less:Decrease in retained earning | $ 120 | |||||||
Net Income for the year | $ 358 | |||||||
Alternatively, | ||||||||
Suppose Net Income "x" and beginning retained earning "y" | ||||||||
Beginning Retained Earning | y | |||||||
Add:Net Income | x | |||||||
Less:Dividend | 478 | |||||||
Ending retained Earning | y+x-478 | |||||||
Further, | ||||||||
retained earning decreased by $ 120 | ||||||||
so, | ||||||||
Beginning retained earning-Ending Retained earning | = | 120 | ||||||
or, | ||||||||
y-(y+x-478) | = | 120 | ||||||
or, | ||||||||
y-y-x+478 | = | 120 | ||||||
or, | ||||||||
-x+478 | = | 120 | ||||||
or, | ||||||||
-x | = | 120-478 | ||||||
or, | ||||||||
-x | = | -358 | ||||||
or, | ||||||||
x | = | $ 358 | ||||||