Question

Cesar Ruiz was reviewing his company's activities at the end of the year (2017) and decided to prepare a retained earnings statement. At the beginning of the year his assets were $530,000, liabilities were $140,000, and common stock was $120,000. The net income for the year was $250,000. Dividends of $220,000 were paid during the year. Prepare a retained earnings statement in good form. (List items that increase retained earnings first.) CESAR RUIZ COMPANY Retained Earnings Statement $ : : $ Click if you would like to Show Work for this question: Open Show Work

Answer 1

Answer:

Retained earnings is $300,000

Explanation:

The first task here that would aid the preparation of retained earnings statement for the current year is to first of determine the retained earnings for last year based on the information provided.

Retained earnings opening=Assets-liabilities-common stock

                                             =$530,000-$140,000-$120,000=$270,000

Retained earnings statement for the current year

Opening retained earnings             $270,000

net income for the year                    $250,000

Total earnings                                   $520,000

dividends                                          ($220,000)

Closing retained earnings               $300,000