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Chapter 13: Q6TI (page 697)

Sjostrom, Inc. had beginning retained earnings of \(300,000 on January 1, 2018. During the year, Sjostrom declared and paid \)140,000 of cash dividends and earned $200,000 of net income. Prepare a statement of retained earnings for Sjostrom, Inc. for the year ended December 31, 2018.

Short Answer

Expert verified

The statement of retained earnings for the year ended December 31, 2018, shows the balance of $360,000

Step by step solution

01

Basic Introduction

Retained earnings is the surplus amount of profit remains with the corporation after distributing dividend to the stockholders of the corporation.

02

Statement of retained earnings

Statement of Retained Earnings

December 31, 2018

Retained Earnings, beginning of the year

$300,000

Less: Dividend Paid

($140,000)

Add: Net Income

$200,000

Retained Earnings, ending of the year

$360,000

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Most popular questions from this chapter

Question: Accounting for cash dividends

Java Company earned net income of \(85,000 during the year ended December 31, 2018. On December 15, Java declared the annual cash dividend on its 4% preferred stock (par value, \)120,000) and a $0.25 per share cash dividend on its common stock (50,000 shares). Java then paid the dividends on January 4, 2019.

Requirements

2. Journalize for Java the entry paying the cash dividends on January 4, 2019.

Reporting earnings per share

Return to the ABC data in Short Exercise S13-12. ABC had 8,000 shares of common stock outstanding during 2018. ABC declared and paid preferred dividends of $4,000 during 2018.

Show how ABC reports EPS data on its 2018 income statement.

How does authorized stock differ from ouststanding stock?

Organizing a corporation and issuing stock

Montel and Jeremy are opening a paint store. There are no competing paint stores in the area. They must decide how to organize the business. They anticipate profits of $350,000 the first year, with the ability to sell franchises in the future. Although they have enough to start the business now as a partnership, cash flow will be an issue as they grow. They feel the corporate form of operation will be best for the long term. They seek your advice.

Requirements

1. What is the main advantage they gain by selecting a corporate form of business now?

On August 1, Hagino Corporation declared a $1.50 per share cash dividend on its common stock (20,000 shares) for stockholders on record as of August 15. Hagino paid the dividend on August 31. Journalize the entries declaring the cash dividend and paying the dividend.
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