Question

Illustrate your understanding of how to use the adjusted trial balance to prepare a statement of retained earnings by completing the following sentence. In order to prepare the statement of retained earnings, the balance of the________________. (Retained earnings / Cash) account balance as well as any debit balance in th_______e (Dividends / Supplies) account is transferred from the adjusted trial balance and is used along with the reported net income (loss) from the Income statement.

Answer 1

Answer:

a. Retained earnings

b. Net income

Explanation:

The statement of the retained earning is shown below:

Retained Earning statement

For the year ended

Beginning balance of retained earning XXXXX

Add: Net income  XXXXX

Less: Cash Dividend paid  XXXXX

Ending balance of retained earning  XXXXX

With the help of the retained earning, net income, and the dividend the statement of the retained earnings should be prepared.