Answer:
Net Income = $28,070
Explanation:
As for the provided details:
Balances as on December 31, 2014
Cash = $70,050
Accounts Receivables = $40,000
Inventory = $77,000
Total Assets = $187,050
Accounts Payable = $13,600
Note Payable = $3,400
Interest payable = $180
Total Liabilities = $17,180
Common Stock = $70,900 + $70,900 = $141,800
Retained earnings = $28,070
Total Stockholder's Equity = $169,870
Total of Equity and Liabilities = $187,050
Now, since it is the first year of operations, the balance of retained earnings in beginning = $0.
Also no dividend is paid, therefore, net income for the year shall be
Opening Retained Earnings + Net Income - Dividend = Closing Retained Earnings
$0 + Net Income - $0 = $28,070
Thus, Net Income = $28,070
