Question

The ending Retained Earnings balance of Boomer Inc. decreased by $1.0 million from the beginning of the year. The company declared a dividend of $5.4 million during the year. What was the net income earned during the year?

A. $7.5 million
B. $6.4 million
C. $4.4 million
D. $1.0 million

Answer 1

The net income earned during the year is $4.4 million.

Step-by-step explanation:

The net income earned during the year can be calculated by subtracting the decrease in Retained Earnings from the dividend declared.

In this case, the Retained Earnings decreased by $1.0 million and the dividend declared was $5.4 million. Therefore, the net income earned during the year would be $5.4 million - $1.0 million = $4.4 million.