If the beginning balance of Retained Earnings equals $12,000,the ending balance of Retained Earnings equals $15,000,and dividends for the year equal $1,000,then net income for the year equals $4,000.

Question

Quizplus · Accepted Answer

Net income can be calculated as the change in retained earnings plus dividends. Therefore,
Net income = Ending retained earnings - Beginning retained earnings - Dividends
Net income = $15,000 - $12,000 - $1,000
Net income = $2,000
However, this calculation assumes that there were no other adjustments (such as prior period adjustments or accounting errors) that affected retained earnings during the year. Therefore, the answer of $4,000 can be considered plausible but not certain based on the given information.

If the Beginning Balance of Retained Earnings Equals $12,000,the Ending