The following account balances were selected from the records of beverage maker

Question

The following account balances were selected from the records of beverage maker Blake Corporation at December 31 after all adjusting entries were completed: Common stock (par $15; authorized 100,000 shares, issued 32,000 shares, of which 1,100 shares are held as treasury stock) Additional paid-in Dividends Retained eamings, beginning of year Treasury stock at cost (1,100 shares) $480,000 177,000 25,000 73,000 22,000 capital-common stock Net income for the year was $43,500 Required 1-a. Prepare the statement of retained earnings for the year ended December 31 BLAKE CORPORATION Statement of Retained Earnings For the Year Ended December 31 Retained Earnings, January 1 Retained Earnings, December 31

Explanation / Answer

1-a) Statement of Retained Earnings Retained Earnings ,January 1 73,000 Add:Net income 43,500 less:Dividends 25,000 Retained Earnings ,December 31 91,500 1-b) Stockholder's Equity Contributed capital common stock 480,000 Addittional paid in capital -CS 177,000 total Contributed capital 657,000 Add Retained earnings 91,500 total Contributed capital & retained earnings 748,500 less:treasury stock 22,000 total stockholder's Equity 726,500 2) Number of shares that received dividend 30,900 3) ROE ratio = net income/average stockholders Equity                   = 43,500/676,250 6.4%

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