Answer:
a. $62,700
b. $42,900
Explanation:
In this question, we have to use the accounting equation which is shown below:
Total assets = Total liabilities + owner equity
where,
Total assets = Cash + accounts receivable + supplies + equipment
= $8,800 + $25,300 + $7,700 + $154,000
= $195,800
Total liabilities = Accounts payable = $12,100
And, the owner equity = Common stock + retained earning
Now put the values to the above formula,
So, the values equal to
$195,800 = $12,100 + $121,000 + retained earnings
$195,800 = $133,100 + retained earnings
So, the retained earnings = $195,800 - $133,100 = $62,700
(B) The computation of the net income is shown below:
Net income = Ending retained earning balance - beginning retained earning balance + dividend paid
= $62,700 - $33,000 + $13,200
= $42,900
