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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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Problem 1-62B Retained Earnings Statements

The table below presents the retained earnings statements for Dillsboro Corporation for 3 successive years. Certain number are missing.

Chapter 1, Problem 62BPSB, Problem 1-62B Retained Earnings Statements The table below presents the retained earnings statements

Required:

Use your understanding of the relationship between successive retained earnings statements to calculate the missing values (a-g).

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 missing amounts.

Explanation

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

The missing amounts are calculated as follows:

    Dillsboro Corporation
    Statement of Retained earnings
    Year 2018 Year 2019 Year 2020
    Beginning Balance of retained earnings$ 15,800 $ 19,500 $ 26,700

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