The statement of stockholders' equity for Jutras Corporation shows an increase in the Common Stock account of $8,000,an increase in Additional Paid-In Capital-Common in the amount of $22,000,and an increase in Retained Earnings of $50,000.If the stock has a par value of $3 and dividends of $10,000 were declared and paid during the year,what is the amount of net income for the year?

Question

Quizplus · Accepted Answer

The increase in Common Stock of $8,000 represents the issuance of new shares of stock at par value.

The increase in Additional Paid-In Capital-Common of $22,000 represents the proceeds received from the issuance of those new shares, in excess of their par value.

The increase in Retained Earnings of $50,000 represents the company's net income for the year, minus any dividends paid out to shareholders.

To calculate the net income for the year, we need to use the following formula:

Net Income = (Increase in Retained Earnings - Dividends Paid)

Net Income = ($50,000 - $10,000)

Net Income = $40,000

Therefore, the correct answer is C) $60,000.

The Statement of Stockholders' Equity for Jutras Corporation Shows an Increase