Question

Kensington Corp. reports net income of $280,000 for the year ended December 31, 2020. The company recorded an unrealized loss on available-for-sale debt securities of $15,000 (after tax) for the year ended December 31, 2020 and deferred the loss. The company declared dividends of $40,000 for the year and its tax rate is 25%. The December 31, 2019, balance in accumulated other comprehensive income is $18,000 (debit balance) and the balance in retained earnings is $100,000 (credit balance). What is the ending balance in accumulated other comprehensive income and retained earnings on December 31, 2020

Answer 1

Answer:

Kensington Corp.

                                         Accumulated other              Retained Earnings

                                       comprehensive income

December 31, 2020                $33,000 (DR)                  $340,000 (CR)

Explanation:

a) Data and Calculations:

Tax rate = 25%

                                         Accumulated other              Retained Earnings

                                       comprehensive income

December 31, 2019                   $18,000  (DR)                  $100,000 (CR)

Net income for 2020                                                          280,000

Unrealized loss  for 2020          15,000

Dividends for 2020                                                             (40,000)

December 31, 2020                $33,000 (DR)                  $340,000 (CR)