Question

Aikman Company has paid dividends of $2,410, $0, $1,570 and $1,060 over the first four years of the company's existence. If Retained Earnings after year four has an ending balance of $9,700, what is the average annual amount of net income (loss) over the past four years for Aikman?

Answer 1

Answer:

the average net income will be of 3,685

Explanation:

$Beginning Retained Earnings +/- Net Income/Loss - Dividends Equals Ending Retained Earning$

total dividends: 2,410 + 0 + 1,570 + 1,060 = 5,040

as the company is beginning his existence there is no beginning retained earnings.

beginning  RE: 0

ending RE 9,700

0 + net income - 5,040 = 9,700

net income = 9,700 + 5,040 = 14,740

this will be the income for the four year.

we now average:

14,740 / 4 = 3,685 average income per year