Purrfect Pets had a beginning balance in its retained earnings account of $385,600.During the year,the company declared and paid a $4,700 dividend,and at the end of the year,it reported retained earnings of $399,860.The company's net income for the year was:

Question

Quizplus · Accepted Answer

We can use the formula for retained earnings: 
Retained Earnings = Beginning Retained Earnings + Net Income - Dividends 
Plugging in the numbers given: 
$399,860 = $385,600 + Net Income - $4,700 
Solving for Net Income: 
Net Income = $18,960

Purrfect Pets Had a Beginning Balance in Its Retained Earnings