Question 9BE
Question
Portman Corporation has retained earnings of \(675,000 at January 1, 2017. Net income during 2017 was \)1,400,000, and cash dividends declared and paid during 2017 totaled $75,000. Prepare a retained earnings statement for the year ended December 31, 2017.
Step-by-Step Solution
Verified Answer
The retained earnings statement shows a balance on December 31, 2017, for $2,000,000.
1Meaning of retained earnings
Income earned after paying dividends to common shareholders is the accumulated profit the company uses to distribute to shareholders or to retain in the business for further investment.
2Preparation of Retained Earnings Statement
| Portman Corporation | |
| Retained Earnings Statement | |
| For the Year Ended December 31, 2017 | |
Retained Earnings on Jan. 1, 2017 | $675,000 |
Add: Net Income | $1,400,000 |
Less: Cash Dividends | ($75,000) |
Retained Earnings on Dec. 31, 2017 | $2,000,000 |
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