I am having an issue with this question.

During 2006, Company X had revenues of $230,000 and expenses, including income taxes, of $190,000. On December 31, 2005, Edgemont had assets of $350,000, liabilities of $80,000, and capital stock of $210,000. Edgemont paid a cash dividend of $25,000 in 2006. No additional stock was issued. Compute the retained earnings on December 31, 2005, and 2006.

I was able to figure out the 2005 RE
210,000+80,000= 290,000
350,000-290,000= 60,000
2005 Retained Earnings = 60,000

I am having difficulty now with the 2006 RE. Can anyone explain to me???

Thanks in advance

CaptainForest

2005 RE 60,000
Plus Net Income of 40,000
Less Dividends Paid 25,000
2006 RE = 75,000