Question

The account balances and income statement of Winfrey Towing Service on June 30, 2018, follow:Equipment $18,250 Service Revinue $10,800Office Supplies 1,400 Account Receivable 8,400Notes Payable 5,000 Accounts Payable 11,000Rent Expense 550 Retined Earnings, June 1, 2018, 3,900Cash 2,200 Salries Expense 1,900Dividends 4,000 Common Stock 6,000Required:a. Prepare the statement of retained earnings for Winfrey Towing Service for the month ending June 30, 2018.b. What does the statement of a retained earnings report?

Answer 1

Answer:

See explanations below.

Explanation:

First , we need to calculate net income

Revenues :

Service revenue $10,800

Less : Expenses:

Salary expense $1,900

Rent expense $550

Total expense. ($2,450)

Net income. $8,350

a. Winfrey Towing Service

Statement of retained earnings

Month ended, June 30 2018

Retained earnings June 1, 2018 $3,900

Add net income for the month $8,350

$12,250

Less: Dividends ($4,000)

Retained earnings June 30, 2018 $8,250

b. Statement of retained earnings report is the change in retained earnings of a firm or business unit during a given period of time.