Question

Stone Culture Corporation was organized on January 1, 2017. For its first two years of operations, it reported the following:
Net Income for 2017 $ 54,000
Net Income for 2018 59,000
Dividends for 2017 22,000
Dividends for 2018 34,000
Total assets at the end of 2017 139,000
Total assets at the end of 2018 256,000
On the basis of the data given, prepare a statement of retained earnings for both 2017 (its first year of operations) and 2018.

Answer 1

Answer:

             Statement of retained earnings

                   For the year ended 2017

Retained earnings, January 1, 2017              $0

Add: Net Income                                         $54,000  

Less: Dividends                                           $22,000

Retained earnings, December 31, 2017   $32,000

            Statement of retained earnings

                  For the year ended 2018

Retained earnings, January 1, 2018             $0

Add: Net Income                                          $59,000

Less: Dividends                                            $34,000

Retained earnings, December 31, 2018   $25,000

Answer 2

a. Statement of retained earnings for the year ended 2017 is $32,000.

b. Statement of retained earnings for the year ended 2017 is $25,000.

Statement of retained earnings:

Statement of retained earnings for the year ended 2017

Retained earnings, January 1, 2017              $0

Add Net Income                                         $54,000  

Less Dividends                                           ($22,000)

Retained earnings, December 31, 2017    $32,000

($54,000-$22,000)

Statement of retained earnings for the year ended 2018

Retained earnings, January 1, 2018             $0

Add Net Income                                          $59,000

Less Dividends                                            $34,000

Retained earnings, December 31, 2018    $25,000

($59,000-$34,000)

Inconclusion the statement of retained earnings for the year ended 2017 is $32,000 and the Statement of retained earnings for the year ended 2017 is $25,000.

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