Answer:
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Statement of Retained Earnings
For the Month Ended on August 31, 202X
Retained earnings at the beginning of the period: $0
Net Income: $10,410
Dividends: <u>($6,020)</u>
Retained earnings at the end of the period $4,390
Explanation:
First we must organize the numbers and prepare an income statement:
Consulting fees earned $27,010
Rent expense ($9,570)
Salaries expense ($5,620)
Telephone expense ($880)
<u>Miscellaneous expenses ($530)</u>
Net income: $10,410
then a balance sheet:
Balance Sheet
Assets:
Cash $25,370
Accounts receivable $22,370
Office supplies $5,260
Land $44,010
Office equipment $20,020
Total assets: $117,030
Liabilities and Equity:
Accounts payable $10,540
Common stock $102,100
Total liabilities and equity: $112,640
+ Retained earnings $4,390
Total: $117,030
Dividends 6,020
two ways to determine retained earnings:
- Retained earnings ⇒ assets - (liabilities + equity) = $117,030 - $112,640 = $4,390
- Another way to calculate retained earnings = net income - dividends = $10,410 - $6,020 = $4,390
