Exercise 1-20A (Algo) Analyzing retained earnings to determine net income LO 1-7, 1-8

The December 31, Year 1, balance sheet for Deen Company showed total stockholders equity of $73,000. Total stockholders equity increased by $42,000 between December 31, Year 1, and December 31, Year 2. During Year 2, Deen Company acquired $10,500 cash from the issue of common stock. Deen Company paid a $8,500 cash dividend to the stockholders during Year 2.

Required: Determine the amount of net income or loss Deen reported on its Year 2 income statement. (Hint: Remember that stock issues, net income, and dividends all change total stockholders equity.)