Rolt Company began 2013 with $135,000 balance retained earnings. During the yet,

Question

Rolt Company began 2013 with $135,000 balance retained earnings. During the yet, the following event occurred:

1. the company earned net income of $70,000
2. A material error in net income from previous period was corrected. The error correction increased retained earnings by $8,960 after related income taxes of $3,840.
3. Cash dividends totalling $10,500 and stock dividends totaling $19,000 was declared.
4. One thousand shares of callable preferred stock that originally had been issued at $115 per share were recalled and retired at the beginning of 2013 for the call price of $125 per share.
5. Treasury stock (common) was acquired at a cost of $21,000. State law requires a restriction of retained earnings in an equal amount. The company reports it's retained earnings restrictions in a note to the financial statement.

Required :

1. prepare a statement of retained earnings for the year ended December 31, 2013.

Explanation / Answer

Amount $ Retained Earnings as previously reported, January 1, 2013          135,000 Prior period adjustment              8,960 Adjusted retained earnings, January 1, 2013          143,960 Net Income            70,000 Cash dividend          (10,500) stock dividend          (19,000) Retained Earnings ,December 31, 2013          184,460

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