
Originally Posted by
Krissy57af
I used assets=liabilites+equity to solve for equity and got $65,000.
You're off to a good start, Krissy.
You're also correct that ending Retained Earnings must be 35K. One thing to consider, though, is that Retained Earnings is
reduced by Dividends. The "Retained Earnings" equation plays out like this...
[Beginning RE] + [Net Income (or minus Net Loss)] - [Dividends] = [Ending RE]
Since this is the company's initial year, Beginning RE is zero. With this, plus what's been given, and tossing in what you've calculated yourself, this equation becomes
0 + [Net Income] - 16 = 35 (all in thousands, of course). Use that to find Net Income, then use your
Net Income = Revenues minus Expenses equation to wrap it up.