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17 April, 19:50

Capstone Corp. reported $150,000 of comprehensive income for 2014. It also reported the following:

Beginning retained earnings

$300,000

Income tax expense

$ 60,000

Ending retained earnings

$320,000

Cash dividends declared

$ 80,000

Other comprehensive income

$ 50,000

What was Capstone's net income for 2014?

A.$40,000

B.$140,000

C.$120,000

D.$100,000

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Answers (1)
  1. 17 April, 20:58
    0
    Option (D) is correct.

    Explanation:

    Given that,

    Beginning retained earnings = $300,000

    Income tax expense = $60,000

    Ending retained earnings = $320,000

    Cash dividends declared = $80,000

    Net income:

    = Increase in Retained Earnings + Dividend Declared

    = (Ending Retained Earnings - Beginning Retained Earnings) + Dividend Declared

    = ($320,000 - $300,000) + $80,000

    = $20,000 + $80,000

    = $100,000
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