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26 May, 07:34

If beginning retained earnings was $70,000, ending retained earnings was $88,000, and cash dividends in the amount of $21,000 were declared and paid, the amount of net income or net loss was?

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  1. 26 May, 07:57
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    Net income = $39,000

    Explanation:

    The computation of the amount of net income or net loss is presented below:

    As we know that

    The ending balance of retained earning = Beginning balance of retained earnings + net income or net loss - cash dividend paid

    $88,000 = $70,000 + net income or net loss - $21,000

    $88,000 = $49,000 + net income or net loss

    So, the net income is

    = 88,000 - $49,000

    = $39,000
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