Newland Company reported retained earnings at December 31, 2016, of $300,000. Ne
ID: 2419528 • Letter: N
Question
Newland Company reported retained earnings at December 31, 2016, of $300,000. Newland had 190,000 shares of common stock outstanding at the beginning of 2017. The following transactions occurred during 2017. 1. An error was discovered. In 2015, depreciation expense was recorded at $65,000, but the correct amount was $45,000. 2. A cash dividend of $0.35 per share was declared and paid. 3. A 5% stock dividend was declared and distributed when the market price per share was $13 per share. 4. Net income was $280,000. Prepare a retained earnings statement for 2017. (List items that increase retained earnings first.)
Explanation / Answer
Answer :
Retained Earning Statement Amt ($) Balance as on December 31, 2016 300000 ADD Depreciation wrongly excess charges (65000-45000) 20000 Net Income for 2017 280000 300000 Less Cash Dividend (190000*0.35) 66500 Stock Dividend (190000*5%*13) 123500 190000 Balance as on December 31, 2017 410000