Question

Partial adjusted account balance data for Swifty Corporation at December 31, 2017, includes the following accounts: Retained Earnings $17,000, Dividends $5,500, Service Revenue $36,300, Salaries and Wages Expense $14,700, Insurance Expense $1,830, Rent Expense $3,810, Supplies Expense $1,410, and Depreciation Expense $800. The balance in Retained Earnings is the balance as of January 1. Prepare a retained earnings statement for the year assuming net income is $15,787.

Answer 1

Answer:

Swifty Corporation

Retained Earnings Statement for the year ended December 31, 2017:

Net Income                                         $15,787

Retained Earnings, January 1, 2017    17,000

Less Dividends                                    (5,500)

Retained Earnings, Dec. 31, 2017    $27,287

Explanation:

a) Data and Calculation:

Service Revenue                                $36,300

less expenses:

Salaries and Wages Expense $14,700

Insurance Expense                      1,830

Rent Expense                              3,810

Supplies Expense                        1,410

Depreciation Expense                  800

Total expenses                                    $22,550

Net income is supposed to be             $13,750 and not $15,787.

The Retained Earnings Statement is prepared with the given net income of $15,787.   It shows the movement in earnings and distribution to stockholders.