Calculating net income from retained earnings


Joined
Mar 21, 2014
Messages
2
Reaction score
0
Please help me with how to figure net income. I've been calculating total dividends paid for 2015; subtracting 2015 retained earnings from 2014; then adding dividends paid in 2015 to retained earnings balance. I get the wrong answer every time.

The question was:
The equity sections from the 2014 and 2015 balance sheets of Benson Inc. appeared as follows:




Benson Inc.Equity Section of Balance Sheet
December 31, 2014
Contributed capital Common shares, unlimited shares authorized; 140,000 shares issued and outstanding
420,000Retained earnings
145,000Total equity
565,000

Benson Inc.Equity Section of Balance Sheet
December 31, 2015
Contributed capital Common shares, unlimited shares authorized; 155,000 shares issued and outstanding
465,000Retained earnings
50,000Total equity
515,000

On January 6, and again on June 3, the board of directors declared $0.30 per share cash dividends on the outstanding common shares. On March 19, 15,000 additional common shares were issued. Under the assumption that there were no transactions affecting retained earnings other than the ones just described, determine the 2015 net income (net loss) of Benson Inc..


Your solution was:
Indicate whether Benson Inc. had a net gain or loss in 2015.



Net income or loss =Net lossby $



Marking:
The correct answer was: Net loss by $6,500

:confused:
 
Ad

Advertisements

Triest123

VIP Member
Joined
Feb 12, 2012
Messages
269
Reaction score
50
Please help me with how to figure net income. I've been calculating


Marking:
The correct answer was: Net loss by $6,500

:confused:

=> The dividend paid for the year 2015 is
140,000 shares x $0.3 + 155,000 shares x $0.3
= $88,500


Retained earnings as at 31 Dec 2015 $50,000
Add : Dividend paid for 2015 $88,500
Less : Retained earning as at 31 Dec 2014 ($145,000)
Net (loss) for the year 2015 (6,500)
 
Last edited:
Ad

Advertisements

Joined
Mar 21, 2014
Messages
2
Reaction score
0
Thanks! I was calculating current year dividends by using current year data, not previous year data.
 

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Similar Threads


Top