Question

On december 31, 2016 jasper enterprises had a retained earnings account balance of $432,800. during the year jasper declared and paid a $20,200 dividend. at december 31, 2017, jasper reported retained earnings of $439,500. what amount of net income (net loss) did jasper report for 2017?

Answer 1

Calculation of amount of net income (net loss):

The amount of net income (net loss) can be calculated using the formula of retained earnings.

Retained earnings ending balance = Retained earnings beginning balance + net Income – Dividends

We are given that:

Retained earnings ending balance =$439,500

Retained earnings beginning balance= $432,800

Dividends = $20,200

Let’s say Net Income = X

Hence,

Retained earnings ending balance = Retained earnings beginning balance + net Income – Dividends

439500 = 432800+X-20200

439500 = 412600+X

X = 439500-412600 = 26,900

Hence, the Net Income reported by Jasper in the year 2017 is $26,900