Question

Dynamic Production Services started the year with total assets of​ $120,000 and total liabilities of​ $55,000. The revenues and the expenses for the year amounted to​ $100,000 and​ $80,000, respectively. During the​ year, the company did not issue any common​ stock, but it distributed dividends of​ $50,000. Calculate​ Dynamic's net income for the year.

Answer 1

$20,000

Step-by-step explanation:

The income statement shows the revenue and expenses of an entity for a period. The difference between the entity's revenue and expenses gives the net income.

The balance sheet on the other hand shows the company's assets and liabilities, the difference of these is the owners equity.

Hence Dynamic's net income for the year,

= $100,000 - $80,000

= $20,000