Vandever Company's balance sheet reported assets of $42,000, liabilities of $15,000 and common stock of $12,000 as of December 31, 2012. If Retained Earnings on the December 31, 2013 balance sheet is $18,000 and Vandever paid a $14,000 dividend during 2013, then the amount of net income for 2013 was which of the following?
A)$17,000
B)$15,000
C)$3,000
D)None of these

Question

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If assets on December 31, 2012 totaled $42,000, total claims (including liabilities, common stock, and retained earnings) on that date must have also been $42,000. If liabilities were $15,000 and common stock was $12,000, retained earnings on December 31, 2012 must have been $15,000. At the end of 2013, the company reported $18,000 in retained earnings, a $3,000 increase. During 2013, Vandever paid a $14,000 cash dividend, which reduced retained earnings. Therefore, 2013 net income must have been $3,000 greater than the dividend pai

Vandever Company's Balance Sheet Reported Assets of $42,000, Liabilities of $15,000