Answer:
Net income for the year = $179,500
Explanation:
For the information provided we have,
Opening information
Assets = $709,000
Liabilities = $354,500
Common stock = $209,000
Therefore, retained earnings at beginning shall be computed:
Assets = Liabilities + Stockholder's Equity
$709,000 = $354,500 + $209,000 + Retained Earnings
$709,000 = $563,500 + Retained earnings
$145,500 = Retained Earnings
Now, for the year information is as follows:
Increase in assets = $409,000, therefore assets = $709,000 + $409,000 = $1,118,000
Decrease in liabilities = $54,500, therefore, balance of liabilities = $354,500 - $54,500 = $300,000
Increase in common stock = $284,000, therefore, balance of common stock = $209,000 + $284,000 = $493,000
Therefore balance of retained earnings = Assets - Liabilities - Common stock
$1,118,000 - $300,000 - $493,000 = $325,000
Therefore increase in retained earnings = net income for the year = $325,000 - $145,500 = $179,500
