Q. 13SE - Horngren'S Financial And Managerial Accounting

Question

Centerpiece Arrangements has just completed operations for the year ended December 31, 2018. This is the third year of operations for the company. The following data have been assembled for the business: Insurance Expense \( 4,500 Salaries Expense \) 46,000 Service Revenue 70,000 Accounts Payable 17,600 Utilities Expense 1,400 Office Supplies 1,700 Rent Expense 16,000 Dividends 4,800 Common Stock 9,000 Accounts Receivable 8,000 Cash 7,200 Equipment 12,100 Retained Earnings, January 1, 2018 5,100 

Preparing the statement of retained earnings 

Prepare the statement of retained earnings of Centerpiece Arrangements for the year ended December 31, 2018

Step-by-Step Solution

Answer

Centerpiece Arrangements
Statement of Retained Earnings
Year Ended December 31, 2018
Retained Earnings, January 1, 2018	$5,100
Net income for the year	2100
	7,200
Dividends	(4800)
Retained Earnings, December31, 2018	$2400

 

Step1: Explanation on the statement of retained earnings

Statement of retained earnings represents the net change in the retained earnings due to income and dividend.

Step2: Explanation on retained earnings

Retained earnings are the accumulated profits of prior or previous years. 

Thus, retained earnings is $2,400.