Question

The beginning and ending balances of retained earnings for the year were $30,000 and $35,000 respectively. If dividend payments during the year were $13,000. Determine the net income or net loss for the year.

a. $8,000 net loss
b. $14,000 net income
c. $5,000 net income
d. $11,000 net income

Answer 1

Answer and Explanation:

The computation of the net income or loss for the year is shown below:

As we know that

Ending retained earnings balance = beginning retained earning balance + net income or net loss - dividend paid

$35,000 = $30,000 + net income or net loss - $13,000

$35,000 = $17,000 + net income or net loss

So, the net income or net loss is $18,000

This is an answer but the same is not provided in the given options