Question

The stockholders' equity section of Velcro World is presented here.

VELCRO WORLD
Balance Sheet (partial) (s and shares in thousands Stockholders' equity

Preferred stock, $1 par value $5,300
Common stock, $1 par value 23.00
Additional pald-in capital 728,600
Total paid-in capital 756, 900
Retained earnings Treasury stock, 10,000 common shares (250,000)
Total stockholders equity $ 787,900

Based on the stockholders' equity section of Velcro World answer the following questions. Remember that all amounts are presented in thousands

If retained earnings at the beginning of the period was $243 million and S23 million was paid in dividends during the year. What was the net income for the year?

Answer 1

To calculate the net income, subtract the beginning retained earnings and add dividends to the ending retained earnings. After adjusting figures to account for 'thousands' and solving the equation, Velcro World's net income for the year is determined to be $47 million.

Step-by-step explanation:

The student is asking about determining the net income of Velcro World for the year based on changes in the retained earnings and dividend payments. To calculate the net income, we use the following formula: Net Income = Ending Retained Earnings - Beginning Retained Earnings + Dividends. The beginning retained earnings were $243 million, dividends paid were $23 million, and the ending retained earnings can be found in the stockholders' equity section as $787,900 - $756,900 (total paid-in capital) - $250,000 (treasury stock) = ($787,900 - $1,006,900) in thousands, which equals -$219,000 or -$219 million when adjusted for the thousands. Therefore, we solve the equation: Net Income = -$219 million - $243 million + $23 million, which leads to a net income of $47 million for the year.