Retained Earnings Statement Rolt Company began 2013 with a $135,000 balance in 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.

Explanation / Answer

Solution: Rolt Company Statement of Retained Earnings For the ending year December 31,2013 Particular $ Retained Earnings at 01.01.2103 1,35,000 Add-Net Income during the year 85,000 2,20,000 Less-Error correction increased retained earnings 9,870 Dividend 30,000 Stock (1000*5) 5,000 Common Stock Acquired 25,000 Closing Balance 1,50,130

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