Question

Revenues were $150,000, expenses were $141,000, and cash dividends declared and paid were $4000. What were the net income and the change in retained earnings for the period? A) Net income was $150,000; the change in retained earnings was $13,000. B) Net income was $9000; the change in retained earnings was $5000. C) Net income was $9000; the change in retained earnings was $9000.

Answer 1

(B) The net income for the period is $9,000, and the change in retained earnings is $5,000.

Step-by-step explanation:

Net Income = Revenues - Expenses
Change in Retained Earnings = Net Income - Dividends

Revenues = $150,000
Expenses = $141,000
Cash dividends declared and paid = $4,000

1. Calculate the net income:

Net Income = Revenues - Expenses
Net Income = $150,000 - $141,000
Net Income = $9,000

2. Calculate the change in retained earnings:

Change in Retained Earnings = Net Income - Dividends
Change in Retained Earnings = $9,000 - $4,000
Change in Retained Earnings = $5,000