Company Financial Data Analysis
What is the net income for 2019?
A. $ 14,000
B. $ 5,000
C. $ 9,000
D. $ 23,000
Final answer:
The net income for 2019 is calculated by adding the dividends to the change in retained earnings. With an ending retained earnings of $77,000, a beginning of $68,000, and dividends of $14,000, the net income is $23,000, which is option D.
Explanation:
To find the net income for 2019, we need to analyze the changes in Retained Earnings. The formula to calculate net income (NI) considering dividends paid is as follows:
Net Income = Ending Retained Earnings - Beginning Retained Earnings + Dividends
Substituting the given values:
- Ending Retained Earnings (12/31/2019): $77,000
- Beginning Retained Earnings (12/31/2018): $68,000
- Dividends Declared and Paid in 2019: $14,000
We get:
NI = $77,000 - $68,000 + $14,000 = $9,000 + $14,000 = $23,000
Therefore, the net income for 2019 is $23,000, which corresponds to option D.