Aikman Company has paid dividends of $2,410,$0,$1,570 and $1,060 over the first four years of the company's existence.If Retained Earnings after year four has an ending balance of $9,700,what is the average annual amount of net income (loss)over the past four years for Aikman?

Question

Quizplus · Accepted Answer

The average annual amount of net income (loss) over the past four years can be calculated as:

Total net income (loss) = Retained earnings at the end of year 4 - Total dividends paid
Total net income (loss) = $9,700 - ($2,410 + $2,000 + $1,570 + $1,060)
Total net income (loss) = $2,660

Average annual net income (loss) = Total net income (loss) / 4 years
Average annual net income (loss) = $2,660 / 4
Average annual net income (loss) = $665

Therefore, the correct option is A) $3,685, which is not an option in the question. The closest option is D) $1,260, which is not the correct answer.

Aikman Company Has Paid Dividends of $2,410,$0,$1,570 and $1,060 Over