Answer:
Renn-Dever Corporation
a. The events and transactions that affected Renn-Dever Corporation's retained earnings during 2019, 2020, and 2021 include:
2019:
Net Loss from the Income Statement of $165,000 reduced the retained earnings balance.
2020:
Net Income from the Income Statement of $2,300,900 increased the retained earnings balance.
Some Common Stock held in Treasury Stock were retired permanently to the tune of $240,000. This reduced the balance of the retained earnings.
Declaration and payment of cash dividend of $758,000 reduced the retained earnings balance.
2021:
There was a net income of $3,408,700 from the income statement which increased the retained earnings balance.
The Company declared stock dividends of $241,500 and cash dividends of $899,950, which together reduced the retained earnings balance.
b. 2019:
Debit Retained Earnings $165,000
Credit Income Summary $165,000
To record the net loss transferred to Retained Earnings.
2020:
Debit Income Summary $2,300,900
Credit Retained Earnings $2,300,900
To record the net income transferred to Retained Earnings.
Debit Retained Earnings $240,000
Credit Treasury Stock $240,000
To record the common stock retired.
Debit Retained Earnings $758,000
Credit Dividends $758,000
To record the cash dividends to stockholders.
2021:
Debit Income Summary $3,408,700
Credit Retained Earnings $3,408,700
To record the transfer of net income to retained earnings.
Debit Retained Earnings $241,500
Credit Stock Dividends $241,500
To record the stock dividends (34,500 shares) to stockholders.
Debit Retained Earnings $899,950
Credit Cash Dividends $899,950
To record the cash dividends to stockholders.
Explanation:
a) Data and Calculations:
RENN-DEVER CORPORATION
Statements of Retained Earnings
For the Years Ended December 31 2021 2020 2019
Balance at beginning of year $6,962,452 $5,659,552 $5,824,552
Net income (loss) 3,408,700 2,300,900 (165,000)
Deductions:
Stock dividend (34,500 shares) 241,500
Common shares retired (120,000 shares) 240,000
Common stock cash dividends 899,950 758,000 0
Balance at end of year $9,229,702 $6,962,452 $5,659,552
