The ending Retained Earnings balance of ABC decreased by $1.5 million from the beginning of the year. The company declared a dividend of $4.4 million during the year. What was the net income for the year?

The ending Retained Earnings balance of ABC decreased by $1.5 million from the beginning of the year. The company declared a dividend of $4.4 million during the year. What was the net income for the year?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The ending Retained Earnings balance of ABC decreased by $1.5 million from the beginning of the year. The company declared
a dividend of $4.4 million during the year. What was the net income for the year?

Expert Solution

Answer

Answer)

Calculation of Net Income earned During the Year

Net Income Earned = (Ending Balance of Retained Earnings – Beginning Balance of Retained Earnings) + Dividends declared during the period

Net Income Earned = - $ 1.50 million + $ 4.40 million

Net Income Earned = $ 2.90 million

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