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To calculate the net income for Year 2 based on the provided data, we need to follow these steps:

### Step 1: Use the Accounting Equation
\[
\text{Assets} = \text{Liabilities} + \text{Common Stock} + \text{Retained Earnings}
\]

At the end of Year 1:
- **Assets** = $135,000
- **Liabilities** = $37,500
- **Common Stock** = $30,000
- We can solve for Retained Earnings (Year 1):

\[
\text{Retained Earnings (Year 1)} = \text{Assets} - (\text{Liabilities} + \text{Common Stock})
\]
\[
\text{Retained Earnings (Year 1)} = 135,000 - (37,500 + 30,000) = 135,000 - 67,500 = 67,500
\]

### Step 2: Calculate Retained Earnings at the End of Year 2
The problem states that Retained Earnings at the end of Year 2 are $92,000, and dividends paid in Year 2 are $33,500.

### Step 3: Net Income Formula
We can use the following formula to find the net income for Year 2:
\[
\text{Net Income} = \text{Retained Earnings (End of Year 2)} - \text{Retained Earnings (Beginning of Year 2)} + \text{Dividends Paid}
\]
\[
\text{Net Income} = 92,000 - 67,500 + 33,500
\]
\[
\text{Net Income} = 24,500 + 33,500 = 58,000
\]

### Final Answer:
The net income for Year 2 is **$58,000**.

Would you like any more details or have any further questions? Here are some additional related questions:

1. How do retained earnings affect a company's equity?
2. What is the relationship between dividends and retained earnings?
3. How can changes in liabilities and assets impact net income?
4. What role does common stock play in calculating net income?
5. Why is net income important in evaluating a company’s financial performance?

#### Tip:
When analyzing financial statements, always remember that dividends decrease retained earnings but do not affect net income directly—they reflect profit distribution to shareholders.

Stosch Company's reported the following for Year 1 and Year 2. What is the net income in Year 2? Year 1: Assets = $135,000, Liabilities = $37,500, Common Stock = $30,000. Year 2: Dividends = $33,500, Retained Earnings (End of Year) = $92,000.

Learn how to determine Stosch Company's net income for Year 2 using the accounting equation and net income formula. With data including assets, liabilities, common stock, dividends, and retained earnings, this solution offers a step-by-step approach. Ideal for college-level accounting students.

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