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    enigma101's Avatar
    enigma101 Posts: 5, Reputation: 1
    New Member
    		  
    #1

    Aug 31, 2009, 02:04 PM
    Net income / Net loss
    Here is the question:

    The beginning balance of retained earnings was $7,500. The dividends paid to stockholders' were $1,500. The ending balance of retained earnings is $5,000. What was the net income or net loss for the accounting period?

    Is this correct:

    7,500-1,500=6,000
    6,000-5,000=1,000 (why would this be net loss?)

    Thanks a bunch!
    :)
    ArcSine's Avatar
    ArcSine Posts: 969, Reputation: 106
    Senior Member
    		  
    #2

    Aug 31, 2009, 02:08 PM
    You got it, Enigma. As to why it must be a loss, think it through...

    Beginning Retained Earnings
    Plus Net Income (or minus Net Loss)
    Minus Dividends paid out
    = Ending Retained Earnings
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