Question

In its recent income statement, Smith Software Inc. reported paying $12 million in dividends to common shareholders, and in its year-end balance sheet, Smith reported $386 million of retained earnings. The previous year, its balance sheet showed $372 million of retained earnings. What was the firm's net income during the most recent year

Answer 1

$26 million

Step-by-step explanation:

Given the above information, net income

= Ending retained earnings - Beginning retained earnings + Dividend paid to shareholders

Ending retained earning = $386 million

Beginning retained earning = $372 million

Dividend paid to shareholders = $12 million

Then,

Net income earnings = $386 million - $372 million + $12 million

Net income earnings = $26 million

Therefore, the firm's net income during its most recent year is $26 million