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AccountingIntermediate Accounting: Reporting And Analysis3rd Edition

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Chapter 16, Problem 9E
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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

Solutions

Chapter
Section
Problem 1GI
Problem 2GI
Problem 3GI
Problem 4GI
Problem 5GI
Problem 6GI
Problem 7GI
Problem 8GI
Problem 9GI
Problem 10GI
Problem 11GI
Problem 12GI
Problem 13GI
Problem 14GI
Problem 15GI
Problem 16GI
Problem 17GI
Problem 18GI
Problem 19GI
Problem 20GI
Problem 21GI
Problem 22GI
Problem 23GI
Problem 1MC
Problem 2MC
Problem 3MC
Problem 4MC
Problem 5MC
Problem 6MC
Problem 7MC
Problem 8MC
Problem 9MC
Problem 10MC
Problem 1RE
Problem 2RE
Problem 3RE
Problem 4RE
Problem 5RE
Problem 6RE
Problem 7RE
Problem 8RE
Problem 9RE
Problem 10RE
Problem 11RE
Problem 12RE
Problem 1E
Problem 2E
Problem 3E
Problem 4E
Problem 5E
Problem 6E
Problem 7E
Problem 8E
Problem 9E
Problem 10E
Problem 11E
Problem 12E
Problem 13E
Problem 14E
Problem 15E
Problem 16E
Problem 17E
Problem 18E
Problem 19E
Problem 20E
Problem 21E
Problem 22E
Problem 23E
Problem 24E
Problem 25E
Problem 26E
Problem 27E
Problem 28E
Problem 1P
Problem 2P
Problem 3P
Problem 4P
Problem 5P
Problem 6P
Problem 7P
Problem 8P
Problem 9P
Problem 10P
Problem 11P
Problem 12P
Problem 13P
Problem 14P
Problem 15P
Problem 16P
Problem 17P
Problem 18P
Problem 19P
Problem 20P
Problem 21P
Problem 22P
Problem 23P
Problem 24P
Problem 25P
Problem 26P
Problem 1C
Problem 2C
Problem 3C
Problem 4C
Problem 5C
Problem 6C
Problem 7C
Problem 9C
BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Retained Earnings Statement On January 1, 2019, Castillo Company had a retained earnings balance of $206,000. During the year, the following events occurred:

  1. 1. Treasury stock (common) was acquired at a cost of $14,000. State law requires a restriction of retained earnings in an equal amount. The company reports its retained earnings restrictions in a note to the financial statements.
  2. 2. Cash dividends totaling $9,000 and stock dividends totaling $6,000 were declared and distributed.
  3. 3. Net income was $58,000.
  4. 4. Two thousand shares of callable preferred stock were recalled and retired at a price of $150 per share. This stock had originally been issued at $130 per share.
  5. 5. A material error in net income for a previous period was corrected. This error correction decreased retained earnings by $12,600 after a related income tax credit of $5,400.

Required:

  1. 1. Prepare a statement of retained earnings for the year ended December 31, 2019.
  2. 2. Prepare a note to disclose the restriction of retained earnings.

1.

To determine

Ascertain the statement of the retained earnings for the year 2019.

Explanation

Retained earnings:

Retained earnings are that portion of profits which are earned by a company but not distributed to stockholders in the form of dividends. These earnings are retained for various purposes like expansion activities, or funding any future plans.

Ascertain the statement of the retained earnings for the year 2019.

...
Company C
statement of  retained earnings
For the  year ended December 31,2019
ParticularsAmount in $Amount in $
Retained earnings, as previously reported, January 1, 2019 206,000
Less: Prior period adjustments:  
  Correction of overstatement of previous income 12,600
Adjusted retained earnings, January 1, 2019 193,400
Add: Net income 58,000
  251,000
Less: Cash dividends9,000 
         Stock dividends6,000 

         Reduction due to retirement of preferred stock, retained

          earnings , December 31,2019 (1)

40,000

2.

To determine

Provide a note as to disclose the restriction placed on retained earnings

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Ch-16 P-1GICh-16 P-2GICh-16 P-3GICh-16 P-4GICh-16 P-5GICh-16 P-6GICh-16 P-7GICh-16 P-8GICh-16 P-9GICh-16 P-10GI
Ch-16 P-11GICh-16 P-12GICh-16 P-13GICh-16 P-14GICh-16 P-15GICh-16 P-16GICh-16 P-17GICh-16 P-18GICh-16 P-19GICh-16 P-20GICh-16 P-21GICh-16 P-22GICh-16 P-23GICh-16 P-1MCCh-16 P-2MCCh-16 P-3MCCh-16 P-4MCCh-16 P-5MCCh-16 P-6MCCh-16 P-7MCCh-16 P-8MCCh-16 P-9MCCh-16 P-10MCCh-16 P-1RECh-16 P-2RECh-16 P-3RECh-16 P-4RECh-16 P-5RECh-16 P-6RECh-16 P-7RECh-16 P-8RECh-16 P-9RECh-16 P-10RECh-16 P-11RECh-16 P-12RECh-16 P-1ECh-16 P-2ECh-16 P-3ECh-16 P-4ECh-16 P-5ECh-16 P-6ECh-16 P-7ECh-16 P-8ECh-16 P-9ECh-16 P-10ECh-16 P-11ECh-16 P-12ECh-16 P-13ECh-16 P-14ECh-16 P-15ECh-16 P-16ECh-16 P-17ECh-16 P-18ECh-16 P-19ECh-16 P-20ECh-16 P-21ECh-16 P-22ECh-16 P-23ECh-16 P-24ECh-16 P-25ECh-16 P-26ECh-16 P-27ECh-16 P-28ECh-16 P-1PCh-16 P-2PCh-16 P-3PCh-16 P-4PCh-16 P-5PCh-16 P-6PCh-16 P-7PCh-16 P-8PCh-16 P-9PCh-16 P-10PCh-16 P-11PCh-16 P-12PCh-16 P-13PCh-16 P-14PCh-16 P-15PCh-16 P-16PCh-16 P-17PCh-16 P-18PCh-16 P-19PCh-16 P-20PCh-16 P-21PCh-16 P-22PCh-16 P-23PCh-16 P-24PCh-16 P-25PCh-16 P-26PCh-16 P-1CCh-16 P-2CCh-16 P-3CCh-16 P-4CCh-16 P-5CCh-16 P-6CCh-16 P-7CCh-16 P-9C

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