Question

Jensen Enterprises paid $900 in dividends and $920 in interest this past year. Common stock increased by $1,200 and retained earnings decreased by $306. What is the net income for the year?

Answer 1

Net income for the year: 1,206

Step-by-step explanation:

from the RE formula we have:

`Beginning \: RE +/- Net \: Income(loss) - Dividends = Ending \: RE`

If RE decreased by 306 then:

beginning - ending = -306

we can shape the initial formula doing:

`Beginning \: RE - Ending \: RE +/- Net \: Income(loss) - Dividends = 0`

We post the value of the change in RE and the dividends

`(306) +/- Net \: Income(loss) - 900 = 0`

Net Income = 900+306 = 1,206