Question

Intel reports retained earnings at the end of the current year of $32,598 million and retained earnings at the end of the previous year of $30,091 million. The company reported dividends of $3,940 million and other transactions with shareholders that reduced retained earnings during the current year by $1,806 million. How much net income did the firm report in the current year

Answer 1

Answer:

Net Income = $8253 million

Explanation:

The net income earned by the company has two purposes at the end of the year or is treated in two ways. It is either paid out as dividends or is retained in the company and is transferred to the retained earnings account. Thus, we can say that the closing balance of retained earnings can be calculated as,

Closing Balance of retained earnings:

Closing Balance = Opening Balance + Net Income - Dividends - Payments during the year using retained earnings

32598 = 30091  +  Net Income  -  3940  -  1806

32598 - 30091  +  3940  +  1806  = Net Income

Net Income = $8253 million