Question

Stosch Company's balance sheet reported assets of $117,000, liabilities of $30,000 and common stock of $27,000 as of December 31, Year 1. If Retained Earnings on the balance sheet as of December 31, Year 2, amount to $78,000 and Stosch paid a $29,000 dividend during Year 2, then the amount of net income for Year 2 was which of the following?

a. $47,000
b. $60,000 $
c. 29,000
d. $18,000

Answer 1

See below

Step-by-step explanation:

With regards to the following, recall that;

Retained earning at end = Beginning retained earning + Net income - dividend earned

$78,000 = Net income - $29,000

Net income = $78,000 + $29,000

Net income = $107,000

Therefore, the net income for year 2 would be $107,000