Concept explainers
Concept Introduction:
Financial statements: Financial statements are prepared to summaries the account at the end of the period. The statements prepared are Income statement, Balance sheet, Statement of owner’s equity and Cash flows statements.
Statement of
Items reported on a retained earnings statement are explained as follows:
- Beginning Balance of Retained earnings is the ending balance of the retained earnings of the previous year.
- Net Income or Net loss is the amount of net income earned or net loss incurred for the year.
- Dividends Paid are taken for the year.
- Ending Balance of Retained earnings is calculated as follows:
Ending Balance of Retained earnings = Beginning Balance of Retained earnings + Net Income − Net income − Dividends Paid
Requirement-1
To Calculate:
The amount of retained earnings as on Dec. 31, 2019.
Concept Introduction:
Financial statements: Financial statements are prepared to summaries the account at the end of the period. The statements prepared are Income statement, Balance sheet, Statement of owner’s equity and Cash flows statements.
Statement of Retained earnings:
Items reported on a retained earnings statement are explained as follows:
- Beginning Balance of Retained earnings is the ending balance of the retained earnings of the previous year
- Net Income or Net loss is the amount of net income earned or net loss incurred for the year.
- Dividends Paid are taken for the year.
- Ending Balance of Retained earnings is calculated as follows:
Ending Balance of Retained earnings = Beginning Balance of Retained earnings + Net Income − Net income − Dividends Paid
Requirement-2
To Discuss:
The dividend policy of the company,
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Chapter 1 Solutions
Cornerstones of Financial Accounting
- Exercise 1-53 Relationships Among the Financial Statements During 2019, Moore Corporation paid $20,000 of dividends. Moores assets, liabilities, and common stock at the end 012018 and 2019 were: Required: Using the information provided. compute Moores net income for 2019.arrow_forwardUsing the following Company X information, prepare a Retained Earnings Statement: Retained earnings balance January 1, 2019, $121,500 Net income for year 2019, $145,800 Dividends declared and paid for year 2019, $53,000arrow_forwardProblem 1-563 Applying the Fundamental Accounting Equation At the beginning of 2019, KJ Corporation had total assets of $525,100, total liabilities of $290,800. common stock of $100000. and retained earnings of $134,900. During 2019. KJ had net income of $205,500. paid dividends of $70,000. and 1ssued additional common stock for $36,000 KJs total assets at the end of 2019 were $10,100. Required: Calculate the amount of Liabilities that KJ must have at the end of 2019 in order for the balance sheet equation to balance.arrow_forward
- Income Statement and Retained Earnings Huff Company presents the following items derived from its December 31, 2019, adjusted trial balance: The following information is also available for 2019 and is not reflected in the preceding accounts: 1. The common stock has been outstanding all year. A cash dividend of 1.28 per share was declared and paid. 2. Land was sold at a pretax gain of 6,300. 3. Division X (a major component of the company) was sold at a pretax gain of 4,700. It had incurred a 9,500 pretax operating loss during 2019. 4. A tornado, which is an unusual event in the area, caused a 5,400 pretax loss. 5. The income tax rate on all items of income is 30%. 6. The average shareholders equity is 90,000. Required: 1. Prepare a 2019 multiple-step income statement for Huff. 2. Prepare a 2019 retained earnings statement. 3. Compute the 2019 return on common equity (Net Income 4 Average Shareholders Equity).arrow_forwardExercise 1-51 Relationships Among the Financial Statements Zachary Corporations December 31, 2018 balance sheet included the following amounts: Required: Calculate the amount of cash and retained earnings at the end of 2019.arrow_forwardReinhardt Company reported revenues of $122,000 and expenses of $83,000 on its 2019 income statement. In addition, Reinhardt paid of dividends during 2019. On December 31, 2019, Reinhardt prepared closing entries. The net effect of the closing entries on retained earnings was a(n): a. decrease of $4,000. b. increase of $35,000. c. increase of $39,000. d. decrease of $87,000.arrow_forward
- Multiple-Step and Single-Step Income Statements, and Statement of Comprehensive Income On December 31, 2019, Opgenorth Company listed the following items in its adjusted trial balance: Additional data: 1. Seven thousand shares of common stock have been outstanding the entire year. 2. The income tax rate is 30% on all items of income. Required: 1. Prepare a 2019 multiple-step income statement. 2. Prepare a 2019 single-step income statement. 3. Prepare a 2019 statement of comprehensive income.arrow_forwardBrief Exercise 3-34 Preparing a Retained Earnings Statement Refer to the information presented in Brief Exercise 3-33 for Pelton Company. The balance in Retained Earnings of $12,200 represents the balance as of January 1, 2019. Required: Prepare a retained earnings statement for Pelton for 2019.arrow_forwardRetained Earnings Statement Listed below are events that affect stockholders equity. Reported net income of $85,000. Paid a cash dividend of $10,000. Reported sales revenue of $120,000. Issued common stock of $50,000 Reported a net loss of $20,000. Reported of S35,000. Required: For each of the events, indicate whether it increases retained earnings (I), decreases retained earnings (D), or has no effect on retained earnings (NE).arrow_forward
- Short-Term Liquidity Ratios Larry, Curly, and Moe companies operate in the same industry. Fach company provided financial information to the public containing three ratios for 2018 and 2019. Required: Explain which company appears to be the most liquid at December 31, 2019.arrow_forwardProfitability Ratios Tinker Corporation operates in the highly competitive consulting industry. Tinkers balance sheet indicates the following balances as of December 31, 2019. Required: Calculate Tinkers return on equity if Tinkers 2019 net income is $90,000.arrow_forwardPrince Corporations accounts provided the following information at December 31, 2019: What should be the current balance of retained earnings? a. 520,000 b. 580,000 c. 610,000 d. 670,000arrow_forward
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