Changes in account balances of Multi-Plus Inc.during 2012 were:
$\begin{array}{lc}
&\underline{\text { Increase }}\
\text { Assets } & \$ 420,000 \
\text { Liabilities } & 125,000 \
\text { Capital Stock } & 100,000 \
\text { Additional Paid-In Capital } & 140,000 \
\text { Retained Earnings } & ?
\end{array}$
Assuming that there were no charges to retained earnings other than dividends of $62,000,the net income for 2010 was:
A)($7,000)
B)$55,000
C)$117,000
D)$257,000
E)none of the answers are correct

Question

Quizplus · Accepted Answer

The change in retained earnings is calculated as: Increase in Assets - Increase in Liabilities - Increase in Capital Stock - Increase in Additional Paid-In Capital. This gives $420,000 - $125,000 - $100,000 - $140,000 = $55,000. Adding back the dividends of $62,000 gives a net income of $117,000.

Changes in Account Balances of Multi-Plus Inc Assuming That There Were No Charges to Retained Earnings Other