Question

The ending retained earnings balance of Juan's Mexican Restaurant chain increased by $5.3 million from the beginning of the year. The company declared a dividend of $2 million during the year. What was the amount of net income during the year?

Answer 1

$7 million

Step-by-step explanation:

The net income which has been earned by the Juan's Mexican Restaurant during the year shall be determined through following mentioned equation:

Ending retained earnings=opening retained earnings+net income for the year-dividend declared during the year

Assuming, In the given question

Ending retained earnings=$100 million

then

opening retained earnings=$95 million

Net income for the year=?

Dividend declared during the year=$2 million

100=95+net income for the year-2

Net income for the year=100-95+2

Net income for the year=$7 million