Question

Parker, Inc. had a beginning balance in its Retained Earnings account of $386,400. During the year, the company declared and paid a $4,860 dividend and, at the end of the year, it reported Retained Earnings of $401,460. The company's net income for the year was:a. $ 19,740 b. $14,910 c. $ 10,080 d. $ 0.

Answer 1

$ 19,740

Step-by-step explanation:

Retained earnings are calculated by subtracting dividends distributed from the net income. Retained earnings are the business profits kept by a business as opposed to being distributed to shareholders.

A company's net income = retained earnings plus dividends paid.

For Parker dividends declared were: $ 4,860

Retained earnings will be:

Closing retained earnings= opening retained earning + income - dividends

$401,460 =$386,400+income -$4 680

$401,460 =386,400-4680 +income

$401,460=381,720 +income

income= $401,460 -$381,720

=$19,740