Continuing Ops Discontinued Ops Sales (net of returns and discounts 8600000 2800

Question

Continuing Ops Discontinued Ops Sales (net of returns and discounts 8600000 2800000 COGS 5700000 2000000 Operating Expenses 1800000 500000 Gain from sale of component (b4 tax) 200000 Extraordinary loss (b4 tax) 120000 Prior period adj- correction for overstating depr exp in year 3(b4 tax) 777000 Income tax rate is 45% for all items listed above. Prepare a combined statement of income and retained earnings for the period ended Dec31. 100000 shares of common stock outstanding. Beg retained earnings 2000000 paid dividends of 300000. Thank you for your help. I did this a couple of different ways but not sure which way is correct...

Explanation / Answer

I can't do everything, but I'll do what I can.

(a) Reproduce the Retained Earnings account (T account) for the year.
I can't draw the T here, so you have to do it yourself. Draw a big T and entries are as follows:
On the Right hand side of the T, these are the transactions-
Jan. 1 Opening bal. $2,450,000
Dec. 31 Net income $795,000

On the Left hand side of the T, these are the transactions-
Nov. 1 Cash dividend $600,000
Dec. 31 Stock dividend $280,000

Your ending balance should be $2,365,000 (a credit balance)

(b) Prepare a retained earnings statement for the year.
Statement of retained earnings
Year ended Dec 31, 2011
Beginning bal. $2,450,000
Nov. 1 Cash dividend ($600,000)
Dec 31 Net income $795,000
Dec 31 Stock dividend ($280,000)
Dec 31 Ending balance $2,365,000

(c) Prepare a stockholders

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