Bennett Griffin and Chula Garza organized Cole Valley Book Storeas a corporation; each contributed $70,100 cash to start thebusiness and received 5,600 shares of common stock. The storecompleted its first year of operations on December 31, currentyear. On that date, the following financial items for the year weredetermined: December 31, current year, cash on hand and in thebank, $68,750; December 31, current year, amounts due fromcustomers from sales of books, $42,000; unused portion of store andoffice equipment, $73,500; December 31, current year, amounts owedto publishers for books purchased, $13,600; one-year note payableto a local bank for $3,900. No dividends were declared or paid tothe stockholders during the year.
What was the amount of net income for the year? (Hint:Use the retained earnings equation [Beginning Retained Earnings +Net Income ? Dividends = Ending Retained Earnings] to solve for netincome.)
