Answer:
Drexler's net income for 2018 was $300,000.
Explanation:
Assuming the following asset and liability figures for Drexler (missing in the question):
On 31 December 2017:
Total assets $330,000
Total liabilities $25,000
On 31 December 2018:
Total assets $560,000
Total liabilities $35,000
Hence, during the year 2018:
Increase in total assets = $560,000 - $330,000 = $230,000
Increase in total liabilities = $35,000 - $25,000 = $10,000
According to the accounting equation:
Capital = Assets - Liabilities
Hence, Change in Capital = Change in Assets - Change in Liabilities
= $230,000 - $10,000
= $220,000
According to the statement of retained earnings:
Change in stockholders' equity (i.e. capital) = Net income - Dividends
$220,000 = Net income - $80,000
Net income = $220,000 + $80,000
Net income = $300,000
