Question

Landon Corporation was organized on January 2, 2014, with the investment of $120,000 by each of its two stockholders. Net income for its first year of business was $96,560. Net income increased during 2015 to $140,980 and to $164,950 during 2016. Landon paid $23,000 in dividends to each of the two stockholders in each of the three years.
Required:
Prepare a statement of retained earnings for the year ended December 31,2016

Answer 1

Answer:

                                              Landon Corporation

                                     Statement of retained earnings

                                for the year ended December 31,2016

                                                                                                    $

Retained Earning on January 1,2016                              =     145,540

Add : Net Income / Less Net loss                                   =     164,950

Less: Dividend                                                                 =     46,000

Retained earning at December 31,2016                        =     264,490

Working:

Retained Earning on January 1,2014        = $0

Add : Net Income / Less Net loss             = $96,560

Less Dividend                                            = $46,000

Retained earning at December 31,2014  = $50,560

Retained Earning on January 1,2015        = $50,560

Add : Net Income / Less Net loss             = $140,980

Less Dividend                                            = $46,000

Retained earning at December 31,2015  = $145,540