Ozark Corporation's Retained Earnings balance increased by $100,000 during the year. Ozark also paid $30,000 in cash dividends that had been declared last year and declared dividends of $40,000 for the current year (but has not paid them at year-end). Ozark's net income for the current year must be

Question

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The increase in retained earnings is $100,000. Since $30,000 was paid for last year's dividends, the net income must cover this plus the increase, totaling $130,000. The $40,000 declared for the current year does not affect this year's net income calculation.

Ozark Corporation's Retained Earnings Balance Increased by $100,000 During the Year