Question

McKinney Corporation had beginning retained earnings of $2,242,000 and ending retained earnings of $2,499,000. During the year they issued common stock totaling $141,000. No dividends were paid. What was their net income for the year?A)$257,000B)$116,000C)$398,000D)$323,000

Answer 1

Net income for the year = $257,000

Step-by-step explanation:

Retained earnings for the year= Net income - dividends paid.

Since no dividends were paid, retained earnings for the year = net income for the year. At the end of each accounting period, retained earnings are reported on the balance sheet, and the retained profits for the year are added to the beginning balance of retained earnings, to give a cumulative ending balance of $2,499,000.

therefore retained earnings for the year = ending retained earnings balance - beginning retained earnings balance = $2,499,000.-$2,242,000= $257,000.

Net income for the year is thus = $257,000 since no dividends were paid.