Question

Carmen Camry operates a consulting firm called Help Today, which began operations on August 1. On August 31, the company;s records show the following accounts and amounts for the month of August. Use this information to prepare an August statement of retained earnings for Help Today. (Amounts to be deducted should be entered with a minus sign.)
Cash $ 25,360
Dividends $ 6,000
Accounts receivable 22,360
Consulting fees earned 27,000
Office supplies 5,250
Rent expense 9,550
Land 44,000
Salaries expense 5,600
Office equipment 20,000
Telephone expense 860
Accounts payable 10,500
Miscellaneous expense 520
Common stock 102,000
Use the above information to prepare an August statement of retained earnings for Help Today. The Retained Earnings account balance at August 1 was $0. Hint: Net income for August is $10,470.

Answer 1

Answer:

$4,470

Explanation:

Preparation of an August statement of retained earnings for Help Today.

First step is to prepare the income statement of Help Today

HELP TODAY Income Statement

For Month Ended August 31

Revenues:

Consulting fees earned: $27,000

Total Revenues: $27,000

Expenses:

Rent Expenses $9,550

Salaries Expenses $5,600

Telephone Expenses $860

Miscellaneous Expenses $520

Total Expenses $16,530

Net income $10,470

($27,000-$16,530)

Now let Prepare an August statement of retained earnings for Help Today

HELP TODAY Statement of Retained Earnings

For Month Ended August 31

Retained earnings, August 1: $0

Add: Net Income: $10470

Less: Dividends: ($6000)

Retained earnings, August 31: $4470

($10470-$6000)

Therefore August statement of retained earnings for Help Today is $4470