Assume that a merchandising company provided the following beginning and ending budgeted balance sheets for a forthcoming month:

	Beginning Balances	Ending Balances
Cash	$ 30,000	$ 38,000
Accounts receivable	13,000	16,000
Inventory	20,000	18,000
Buildings and equipment	100,000	100,000
Accumulated depreciation	(25,000)	(30,000)
Total assets	$ 138,000	$ 142,000
Accounts payable	$ 4,000	$ 5,000
Common stock	60,000	60,000
Retained earnings	74,000	77,000
Total liabilities and stockholders equity	$ 138,000	$ 142,000

Assuming the company paid a $4,000 dividend during the period, how much net income must be shown on the companys budgeted income statement?

Multiple Choice

• $5,000

• $3,000Incorrect

• $7,000

• $4,000