uestion 9 Newland Company reported retained earnings at December 31, 2013, of $3
ID: 2420655 • Letter: U
Question
uestion 9
Newland Company reported retained earnings at December 31, 2013, of $317,190. Newland had 198,500 shares of common stock outstanding at the beginning of 2014. The following transactions occurred during 2014.
Prepare a retained earnings statement for 2014. (List items that increase retained earnings first.)
NEWLAND COMPANY
Retained Earnings Statement
For the Year Ended December 31, 2014
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1. An error was discovered. In 2012, depreciation expense was recorded at $67,080, but the correct amount was $50,720. 2. A cash dividend of $0.54 per share was declared and paid. 3. A 8% stock dividend was declared and distributed when the market price per share was $17 per share. 4. Net income was $283,600.Explanation / Answer
Retained earnings statement for 2014
Retained Earning beginning balance = 317190
Add: net income (adjusted) = 299960
less: cash dividend[ $0.54 per share *198,500] =(107190)
less: stock dividend[8% * 198500 * $17] = (269960)
Retained earning Ending balance =$240000
Note:- net income = 283,600
Add: depreciation expense rectified[ $67,080 - $50,720] = 16360
Adjusted net income 299960
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