Vandever Company\'s balance sheet reported assets of $87,000, liabilities of $24

Question

Vandever Company's balance sheet reported assets of $87,000, liabilities of $24,000 and common stock of $21,000 as of December 31, 2012. If Retained Earnings on the December 31, 2013 balance sheet is $54,000 and Vandever paid a $23,000 dividend during 2013, then the amount of net income for 2013 was which of the following?

Vandever Company's balance sheet reported assets of $87,000, liabilities of $24,000 and common stock of $21,000 as of December 31, 2012. If Retained Earnings on the December 31, 2013 balance sheet is $54,000 and Vandever paid a $23,000 dividend during 2013, then the amount of net income for 2013 was which of the following?

Explanation / Answer

Total assets=Total liabilities+Total equity

87000=24000+(Common stock+Retained earnings)

87000=24000+21000+Retained earnings

Hence Retained earnings at beginning=(87000-24000-21000)=$42000

Beginning Retained earnings 42000 Add:net income(balance)(54000+23000-42000) $35000. Less:dividends (23000) Ending Retained earnings 54000

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