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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Exercise 1-52 Relationships Among the Financial Statements

The following information for Kellman Inc. is available at the end of 2019.

Chapter 1, Problem 52E, Exercise 1-52 Relationships Among the Financial Statements The following information for Kellman

Required:

Calculate the amount of dividends reported on the retained earnings statement for 2019.

To determine

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

To Calculate:

The amount of dividend reported on the statement of retained earnings for the year 2019.

Explanation

The amount of dividend reported on the statement of retained earnings for the year 2019 is calculated as follows:

    Kellman Inc.
    Total Assets as on Dec. 31, 2018 (A) $ 82,400
    Total Liabilities as on Dec. 31, 2018 (B) $ 9,200
    Total Equity as on Dec. 31, 2018 (C) = (A-B)$ 73,200
    Total Assets as on Dec...

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