Colfax Corporation had a Retained Earnings balance on January 1,2009,of $720,000; declared cash dividends during 2009 in the amount of $112,000,of which $30,000 were not paid until 2010; and reported an ending balance of Retained Earnings of $1,020,000.Based on these facts alone,net income for 2009 for Colfax Corporation must have been

Question

Quizplus · Accepted Answer

The formula for calculating Retained Earnings is:
Retained Earnings = Beginning Retained Earnings + Net Income - Dividends
We know that:
Beginning Retained Earnings (January 1, 2009) = $720,000
Dividends declared during 2009 = $112,000
Dividends paid during 2009 = $82,000 ($112,000 - $30,000)
Ending Retained Earnings (December 31, 2009) = $1,020,000
Using the formula above, we can solve for net income:
$1,020,000 = $720,000 + Net Income - $82,000
$1,020,000 = $638,000 + Net Income
Net Income = $382,000
Therefore, the answer is D, $412,000.

Colfax Corporation Had a Retained Earnings Balance on January 1,2009,of