Question

Maynard Enterprises paid $1,328 in dividends and $969 in interest over the past year. The common stock account increased by $1,224 and retained earnings decreased by $333. What was the company's net income?

Answer 1

Answer:

$995

Explanation:

Net income comprises of the dividends declared and the retained earnings. Dividends and retained earning are obtained from a company's net income. In other words, net come is retained earning plus dividends declared.

Interest paid is an expense that is factored when computing the net income. The common stock account does not relate to the net income.

For Maryland enterprises, net income will be dividend declared plus the change in retained earnings.

i.e., net income =$1,328 +(-333)

=$1,328-333

=$995