Check my work 5 Shown below in T-account format are the changes affecting the re

Question

Check my work 5 Shown below in T-account format are the changes affecting the retained earnings of Forge Corporation during 2018. At January 1 2018, the corporation had outstanding 106 million common shares, $1 par per share. 10 points Beginning balance Retirenent of 6 million conmon shares for $37 million Skipped 97 Net income for the year Declaration and paynent of a 40 0-40 per share cash dividend Declaration and distribation of a 23 Ending balance References Required 1. From the information provided by the account changes you should be able to recreate the transactions that affected Forge's retained earnings during 2018. Prepare the journal entries that Forge must have recorded during the year for these transactions 2. Prepare a statement of retained eamings for Forge for the year ended 2018 Complete this question by entering your answers in the tabs below. Required 1 Required 2

Explanation / Answer

1. Journal Entries

a. Income & Expenses A/c Dr $97million

To Retained Earnings $97million

b. Common Stockl A/c Dr $6million

Retained Earnings A/c Dr $6million

Additonal paid in capital A/c Dr $25million

To Treasury Stock A/c $37million

c. Retained Earnings A/c Dr $40million

To Dividends Payable A/c $40million

d. Retained Earnings A/c Dr $23million

To Common Stock A/c $23million

Since, par value of the common stock is not provided, total amount of stock dividend is taken as common stock.

2. Statement of retained earnings for Forge for the year ended 2018

Particulars Amount ($ in million) Opening Retained Earnings 108 Less: Retirement of common shares (6) Add: Net Income for the year 97 Less: Cash dividend declared (40) Less: Stock dividend declared (23) Closing Retained Earnings 136

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