Waterway Industries began the year by issuing $113000 of common stock for cash. The company recorded revenues of $1109000, expenses of $973000, and paid dividends of $58000. What was Waterway's net income for the year?
A. $78000
B. $136000
C. $191000
D. $249000
Answer:
Computation of net income of Waterway Industries:
Particulars | Amount |
Revenue | $1,109,000 |
Less: Expenses | ($973,000) |
Net Income | $136,000 |
Dividend paid to shareholders by the company is not an expense or loss & hence it is not considered in the income statement, Dividend is like distribution of previously earned income which is part of retained earnings to its shareholders by the company.
Accordingly, Option (B) i.e. $136,000 is the correct answer.
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