Question

Jensen Enterprises paid $900 in dividends and $920 in interest this past year. Common stock increased by $1,200 and retained earnings decreased by $306. What is the net income for the year?

Answer 1

Answer:

Net income for the year: 1,206

Explanation:

from the RE formula we have:

$Beginning \: RE +/- Net \: Income(loss) - Dividends = Ending \: RE$

If RE decreased by 306 then:

beginning - ending = -306

we can shape the initial formula doing:

$Beginning \: RE - Ending \: RE +/- Net \: Income(loss) - Dividends = 0$

We post the value of the change in RE and the dividends

$(306) +/- Net \: Income(loss) - 900 = 0$

Net Income = 900+306 = 1,206