Retained Earnings Statement Rolt Company began 2013 with a $135,000 balance in r
ID: 2459435 • Letter: R
Question
Retained Earnings Statement Rolt Company began 2013 with a $135,000 balance in retained earnings. During the year, the following events occurred: 1.The company earned net income of $85,000. 2.A material error in net income from a previous period was corrected. This error correction increased retained earnings by $9,870 after related income taxes of $4,230. 3.Cash dividends totaling $12,000 and stock dividends totaling $18,000 were declared. 4.One thousand shares of callable preferred stock that originally had been issued at $105 per share were recalled and retired at the beginning of 2013 for the call price of $110 per share. 5.Treasury stock (common) was acquired at a cost of $25,000. 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.
1. Prepare a statement of retained earnings for the year ended December 31, 2013.
I will need the following to go into the spreadsheet:
Retained earnings, as previously reported, January 1, 2013
Add: Correction due to understandment of pervious income
Adjusted retained earning, 1/1/13
Add: Net income
Total
Less: Cash dividends
Less: Stock dividends
Less: Reduction due to retirement of perferred stock both sides debit & credit
Retained earnings, 12/31/13
Explanation / Answer
Retained earnings, as previously reported, January 1, 2013
$135,000
Add: Correction due to understatement of pervious income
$9,870
Adjusted retained earning, 1/1/13
Add: Net income
85,000
Total
$229,870
Less: Cash dividends
-12,000
Less: Stock dividends
-18,000
Less: Reduction due to retirement of preferred stock both sides debit & credit
-5,000
Retained earnings, 12/31/13
$194,870
Retained earnings, as previously reported, January 1, 2013
$135,000
Add: Correction due to understatement of pervious income
$9,870
Adjusted retained earning, 1/1/13
Add: Net income
85,000
Total
$229,870
Less: Cash dividends
-12,000
Less: Stock dividends
-18,000
Less: Reduction due to retirement of preferred stock both sides debit & credit
-5,000
Retained earnings, 12/31/13
$194,870
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