Blue Fin started the current year with assets of $840,000,liabilities of $420,000 and common stock of $240,000.During the current year,assets increased by $480,000,liabilities decreased by $60,000 and common stock increased by $330,000.There was no payment of dividends to owners during the year. What was the amount of Blue Fin's net income for the year?

Question

Quizplus · Accepted Answer

Change in Assets = Change in Liabilities + Change in Stockholders' Equity
Change in Stockholders' Equity = Change in Assets − Change in Liabilities
= $480,000 − ($60,000)= $480,000 + $60,000 = $540,000
Change in Stockholders' Equity = Change in Common Stock + Change in Retained Earnings
Change in Retained Earnings = Change in Stockholders' Equity − Change in Common Stock
= $540,000 − $330,000 = $210,000
Change in Retained Earnings = Net income = Dividends
Net income = Change in Retained Earnings − Dividends
= $210,000 − $0 = $210,000

Blue Fin Started the Current Year with Assets of $840,000,liabilities