Answer: Rs. 120,000
Explanation:
At the end of the year, both assets and liabilities had doubled. New asset and liability figures are therefore:
Assets = Rs. 200,000
Liabilities = Rs. 100,000
Net income is part of equity and as there is no equity, net income must be the entire equity.
Assets = Equity + Liabilities
200,000 = Equity + 100,000
Equity = 200,000 - 100,000
= Rs. 100,000
From this Net income, dividends were distributed to the tune of Rs. 20,000. This should be added back to see the full figure.
= 100,000 + 20,000
= Rs. 120,000
