45PGA_2b
Question
Allen Shonton recently opened his own accounting firm on April 1, which he operates as a corporation. The name of the new entity is Allen Shonton, CPA. Shonton experienced the following events during the organizing phase of the new business and its first month of operations in 2018: Apr. 5 Shonton deposited \(75,000 in a new business bank account titled Allen Shonton, CPA. The business issued common stock to Shonton. 6 Paid \)300 cash for letterhead stationery for new office. 7 Purchased office furniture for the office on account, \(9,500. 10 Consulted with tax client and received \)4,000 for services rendered. 11 Paid utilities, \(190. 12 Finished tax hearings on behalf of a client and submitted a bill for accounting services, \)20,000. 18 Paid office rent, \(750. 25 Received amount due from client that was billed on April 12. 27 Paid full amount of accounts payable created on April 7. 30 Cash dividends of \)3,500 were paid to stockholders. Requirements: Prepare the following financial statements: b. Statement of retained earnings.
Step-by-Step Solution
VerifiedThe retained earnings of the company as on April 30, 2018 is $19,560.
Statement of retained earnings records the change in the balance of retained earnings.
Retained earnings represents the summation of profits of the prior or previous years.
Statement of retained earnings is shown as follows:
Allen Shonton, CPA. Shonton | |
Statement of Retained Earnings | |
Month Ended April 30, 2018 | |
Retained Earnings, April 1, 2018 | $0 |
Net income for the year | 23,060 |
| 23,060 |
Dividends | (3,500) |
Retained Earnings, April 30, 2018 | $19,560 |