The changes in account balances of the Dunedin Corporation during 2014 are presented below: Assuming there are no changes in retained earnings except for net income and a dividend payment of $19,500,the net income for 2014 should be
A) $6,000.
B) $13,500.
C) $19,500.
D) $25,500.

Question

The changes in account balances of the Dunedin Corporation during 2014 are presented below:  Assuming there are no changes in retained earnings except for net income and a dividend payment of $19,500,the net income for 2014 should be
A) $6,000. 
B) $13,500. 
C) $19,500. 
D) $25,500.

Quizplus · Accepted Answer

The net income for the year is calculated as follows:
Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings
$31,000 + Net Income - $19,500 = $45,000
Net Income = $33,500 - $31,000
Net Income = $2,500
Therefore, the correct answer is B) $13,500.

The Changes in Account Balances of the Dunedin Corporation During