Mint Corp. began operations on January 1, Year 1, and had the following items for the year: Sales revenue $6,680,000 Costs and expenses (excluding income taxes) 5,180,000 Dividends declared 160,000 Dividends payable 50,000 Mint's tax rate is 30%. In Mint's December 31, Year 1, balance sheet, what amount should be reported as total retained earnings? A. $890,000 B. $940,000 C. $1,050,000 D. $1,500,000 Explanation Retained earnings is the accumulated net income (loss) of an entity since its inception, less the accumulated declareddividends to shareholders (ie, the income/earnings still retained in the business). At the end of each accounting period, net income and dividends are closed into retained earnings to update the account for the financial statements. Mint's net income is $1,500,000 before taxes and $1,050,000 after taxes (Choices C and D): Sales revenues $6,680,000 Less: Costs and expenses (before taxes) (5,180,000) Net income (before taxes) $1,500,000 Less: Income tax expense (30% × $1,500,000) (450,000) Net income $1,050,000 Dividends are deducted from retained earnings when they are declared because this is the date the board of directors commits to the dividend, and when the liability is created. Mint's beginning retained earnings is $0 because Mint began operations on January 1. Therefore, Mint's ending retained earnings is $890,000. Beginning retained earnings $0 Net income 1,050,000 Less: Dividends declared (160,000) Ending retained earnings $890,000 (Choice B) Retained earnings of $940,000 does not include the dividends payable of $50,000. Although these dividends have not been paid, they have been declared (ie, included in the $160,000 declaration) and are therefore deducted from retained earnings. Things to remember:Retained earnings is the accumulated net income (loss) of an entity since its inception, less accumulated dividends declared since its inception. Application Skill Level Prepare journal entries to recognize equity transactions in the financial statements (e.g., equity issuance, stock dividends, stock splits, treasury stock, capital account activity in pass-through entities). Representative Task I read the answer explanation but I still need help.

Mint Corp. began operations on January 1, Year 1, and had the following items for the year: Sales revenue $6,680,000 Costs and expenses (excluding income taxes) 5,180,000 Dividends declared 160,000 Dividends payable 50,000 Mint's tax rate is 30%. In Mint's December 31, Year 1, balance sheet, what amount should be reported as total retained earnings? A. $890,000 B. $940,000 C. $1,050,000 D. $1,500,000 Explanation Retained earnings is the accumulated net income (loss) of an entity since its inception, less the accumulated declareddividends to shareholders (ie, the income/earnings still retained in the business). At the end of each accounting period, net income and dividends are closed into retained earnings to update the account for the financial statements. Mint's net income is $1,500,000 before taxes and $1,050,000 after taxes (Choices C and D): Sales revenues $6,680,000 Less: Costs and expenses (before taxes) (5,180,000) Net income (before taxes) $1,500,000 Less: Income tax expense (30% × $1,500,000) (450,000) Net income $1,050,000 Dividends are deducted from retained earnings when they are declared because this is the date the board of directors commits to the dividend, and when the liability is created. Mint's beginning retained earnings is $0 because Mint began operations on January 1. Therefore, Mint's ending retained earnings is $890,000. Beginning retained earnings $0 Net income 1,050,000 Less: Dividends declared (160,000) Ending retained earnings $890,000 (Choice B) Retained earnings of $940,000 does not include the dividends payable of $50,000. Although these dividends have not been paid, they have been declared (ie, included in the $160,000 declaration) and are therefore deducted from retained earnings. Things to remember:Retained earnings is the accumulated net income (loss) of an entity since its inception, less accumulated dividends declared since its inception. Application Skill Level Prepare journal entries to recognize equity transactions in the financial statements (e.g., equity issuance, stock dividends, stock splits, treasury stock, capital account activity in pass-through entities). Representative Task I read the answer explanation but I still need help.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 52E: Juroe Company provided the following income statement for last year: Juroes balance sheet as of...

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Related questions

Question

Mint Corp. began operations on January 1, Year 1, and had the following items for the year:

Sales revenue	$6,680,000
Costs and expenses (excluding income taxes)	5,180,000
Dividends declared	160,000
Dividends payable	50,000

Mint's tax rate is 30%. In Mint's December 31, Year 1, balance sheet, what amount should be reported as total retained earnings?

A.	$890,000
B.	$940,000
C.	$1,050,000
D.	$1,500,000

Explanation

Retained earnings is the accumulated net income (loss) of an entity since its inception, less the accumulated declareddividends to shareholders (ie, the income/earnings still retained in the business). At the end of each accounting period, net income and dividends are closed into retained earnings to update the account for the financial statements.

Mint's net income is $1,500,000 before taxes and $1,050,000 after taxes (Choices C and D):

Sales revenues	$6,680,000
Less: Costs and expenses (before taxes)	(5,180,000)
Net income (before taxes)	$1,500,000
Less: Income tax expense (30% × $1,500,000)	(450,000)
Net income	$1,050,000

Dividends are deducted from retained earnings when they are declared because this is the date the board of directors commits to the dividend, and when the liability is created. Mint's beginning retained earnings is $0 because Mint began operations on January 1. Therefore, Mint's ending retained earnings is $890,000.

Beginning retained earnings	$0
Net income	1,050,000
Less: Dividends declared	(160,000)
Ending retained earnings	$890,000

(Choice B) Retained earnings of $940,000 does not include the dividends payable of $50,000. Although these dividends have not been paid, they have been declared (ie, included in the $160,000 declaration) and are therefore deducted from retained earnings.

Things to remember:
Retained earnings is the accumulated net income (loss) of an entity since its inception, less accumulated dividends declared since its inception.

Application

Skill Level

Prepare journal entries to recognize equity transactions in the financial statements (e.g., equity issuance, stock dividends, stock splits, treasury stock, capital account activity in pass-through entities).

Representative Task

I read the answer explanation but I still need help.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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