Question

During 2019, Bascom Bakery paid out $33,525 of common dividends. It ended the year with $262,500 of retained earnings versus the prior year’s retained earnings of $159,600. How much net income did the firm earn during the year?

Answer 1

Answer: $69375

Explanation:

Opening retained earnings = $159600

Closing retained earnings= $262500

Dividend paid = $33525

Closing retained earnings= Opening retained earnings + Net income + Dividend paid

$262500 = $159600 + Net income + $33525

$262500 = $193125 + Net income

Net income = $262500 - $193125

Net income = $69375