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26 February, 17:44

In its recent income statement, Smith Software Inc. reported paying $12 million in dividends to common shareholders, and in its year-end balance sheet, Smith reported $333 million of retained earnings. The previous year, its balance sheet showed $328 million of retained earnings. What was the firm's net income during the most recent year?

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  1. 26 February, 18:01
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    The firm's net income during the most recent year was $17,000,000

    Explanation:

    Ending balance in retained earnings is calculated by using following formula:

    Ending balance in retained earnings = Beginning balance in retained earnings + Net income - Cash dividends - Stock dividends

    Therefore,

    Net income = Ending balance in retained earnings - Beginning balance in retained earnings + Cash dividends + Stock dividends = $333,000,000 - $328,000,000 + $12,000,000 = $17,000,000
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