Use the accounting equation to solve for the missing information

Firm A:

A      =        L      +     PIC    + ( Beg. RE  +  NI  -    DIV     =  End. RE)

$420,000 = $215,000 + $75,000 + ( $78,000   +   ?    - $50,000  =          ?     )

In this case, the ending balance of retained earnings must be determined first:

$420,000 = $215,000 + $75,000 + End. RE.

Retained earnings, 12/31/10 = $130,000

Once the ending balance of retained earnings is known, net income can be determined:

$78,000 + NI – $50,000 = $130,000

Net income for 2010 = $102,000