Hello,

I am working on a homework problem and need some help... I have a company's balance sheet, which includes retained earnings. My assignment is asking me to calculate net income. I also know the amount of dividents paid out. How can I calculate net income from the information on a balance sheet? I know it has something to do with retained earnings, but I cannot figure it out.

Thanks:confused:

You need your Income Statement accounts to calculate net income. Revenues less expenses equals net income. Are you sure you are not to determine owner's equity?

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Originally Posted by skip4

hello,

I am working on a homework problem and need some help... I have a company's balance sheet, which includes retained earnings. My assignment is asking me to calculate net income. I also know the amount of dividents paid out. How can I calculate net income from the information on a balance sheet? I know it has something to do with retained earnings, but I cannot figure it out.

Thanks:confused:

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Informaiton contained in the question is not complete still you can calculate the profit in many ways like :
Diffrence of the capital at the begning and ending capital.
Or retainded earnings+dividends paid +other reserves created out of profits (if given)

If you have 100 in Retained Earnings at the beginning of the year and 200 in it at the end of the year, you know that 100 was added during the year.

Dividends would decrease it.

So if Dividends were 50, then Net Income must be 150 to get the additional 100 above.

Now, if there is additional paid in capital, or other changes to retained earnings, that will affect the calculation of net income as well.

4. Which one of the following statements concerning the board of directors of a corporation is correct?
A. It’s appointed by the provincial government which issues the corporation’s charter.
B. It’s responsible for the daily operations of the corporation.
C. It’s liable for the debts which the corporation incurs.
D. It’s charged with the duty of guiding corporate activities.