The following changes in Patriot Corporation's account balances occurred during 2011:

Patriot paid dividends of $39,000 during the year. There were no changes in Retained Earnings for 2011 except dividends and net income. What was Patriot's net income for 2011?

Question

The following changes in Patriot Corporation's account balances occurred during 2011:

Patriot paid dividends of $39,000 during the year. There were no changes in Retained Earnings for 2011 except dividends and net income. What was Patriot's net income for 2011?

Quizplus · Accepted Answer

To find the net income for 2011, we need to use the following formula:
Net Income = Ending Retained Earnings - Beginning Retained Earnings + Dividends Paid
Since there were no changes in Retained Earnings for 2011 except dividends and net income, we can assume that beginning and ending Retained Earnings are the same. Therefore, we can simplify the formula to:
Net Income = Dividends Paid
Net Income = $39,000 (given in the question)
Hence, the answer is B) $27,000.

The Following Changes in Patriot Corporation's Account Balances Occurred During