The following changes in American Corporation's account balances occurred during 2014:

American paid dividends of $39,000 during the year.There were no changes in Retained Earnings for 2014 except dividends and net income.What was American's net income for 2014?
A)$12,000
B)$27,000
C)$39,000
D)$51,000

Question

The following changes in American Corporation's account balances occurred during 2014:

American paid dividends of $39,000 during the year.There were no changes in Retained Earnings for 2014 except dividends and net income.What was American's net income for 2014?
A)$12,000 
B)$27,000 
C)$39,000 
D)$51,000

Quizplus · Accepted Answer

Net income can be calculated by subtracting the change in Retained Earnings ($0) and the dividends paid ($39,000) from the change in total equity ($66,000). Therefore, net income = ($66,000 - $0 - $39,000) = $27,000.

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