Question

Capstone Corp. reported $150,000 of comprehensive income for 2014. It also reported the following:

Beginning retained earnings

$300,000

Income tax expense

$ 60,000

Ending retained earnings

$320,000

Cash dividends declared

$ 80,000

Other comprehensive income

$ 50,000

What was Capstone's net income for 2014?

A.$40,000

B.$140,000

C.$120,000

D.$100,000

Answer 1

Option (D) is correct.

Step-by-step explanation:

Given that,

Beginning retained earnings = $300,000

Income tax expense = $60,000

Ending retained earnings = $320,000

Cash dividends declared = $80,000

Net income:

= Increase in Retained Earnings + Dividend Declared

= (Ending Retained Earnings - Beginning Retained Earnings) + Dividend Declared

= ($320,000 - $300,000) + $80,000

= $20,000 + $80,000

= $100,000