Rolt Company began 2019 with a $105,000 balance in retained earnings. During the year, the following events occurred: The company earned net income of $86,000. A material error in net income from a previous period was corrected. This error correction increased retained earnings by $9,590 after related income taxes of $4,110. Cash dividends totaling $12,000 and stock dividends totaling $18,500 were declared. One thousand shares of callable preferred stock that originally had been issued at $115 per share were recalled and retired at the beginning of 2019 for the call price of $125 per share. Treasury stock (common) was acquired at a cost of $19,000. State law requires a restriction of retained earnings in an equal amount. The company reports its retained earnings restrictions in a note to the financial statements. Required: Prepare a statement of retained earnings for the year ended December 31, 2019.
Rolt Company began 2019 with a $105,000 balance in retained earnings. During the year, the following events occurred:
- The company earned net income of $86,000.
- A material error in net income from a previous period was corrected. This error correction increased retained earnings by $9,590 after related income taxes of $4,110.
- Cash dividends totaling $12,000 and stock dividends totaling $18,500 were declared.
- One thousand shares of callable
preferred stock that originally had been issued at $115 per share were recalled and retired at the beginning of 2019 for the call price of $125 per share. Treasury stock (common) was acquired at a cost of $19,000. State law requires a restriction of retained earnings in an equal amount. The company reports its retained earnings restrictions in a note to the financial statements.
Required:
Prepare a statement of retained earnings for the year ended December 31, 2019.
options for first blue arrow pull down menu
(Retained earnings, as previously reported, Jan 1, 2019):
Add: Cash
Add: correction due to understatement of previous income
Add: dividends payable
Add: reduction due to retirement of preferred stock
Less: correction due to understatement of previous income
Less: reduction due to retirement of preferred stock
options for second blue arrow pull down menu
(adjusted Retained earnings, Jan 1, 2019):
Add: Cash
Add: net income
Add: reduction due to retirement of preferred stock
Less: correction due to understatement of previous income
Less: net income
Less: reduction due to retirement of preferred stock
options for third blue arrow pull down menu:
add: cash dividends
add: net income
add: reduction due to retirement of preferred stock
add: stock dividends
less: cash dividends
less: net income
options for fourth blue arrow pull down menu:
add: cash dividends
add: net income
add: reduction due to retirement of preferred stock
add: stock dividends
less: net income
less: stock dividends
options for fifth blue arrow pull down menu:
add: cash dividends
add: correction due to understatement of previous income
add: reduction due to retirement of preferred stock
add: stock dividends
less: correction due to understatement of previous income
less: reduction due to retirement of preferred stock
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