Chapter 1, Problem 49E

To determine

Concept Introduction:

Financial statements: Financial statements are prepared to summaries the account at the end of the period. The statements prepared are Income statement, Balance sheet, Statement of owner’s equity and Cash flows statements.

Statement of Retained earnings:

Items reported on a retained earnings statement are explained as follows:

• Beginning Balance of Retained earnings is the ending balance of the retained earnings of the previous year.
• Net Income or Net loss is the amount of net income earned or net loss incurred for the year.
• Dividends Paid are taken for the year.
• Ending Balance of Retained earnings is calculated as follows:

Ending Balance of Retained earnings = Beginning Balance of Retained earnings + Net Income − Net income − Dividends Paid

Requirement-1

To Calculate:

The amount of retained earnings as on Dec. 31, 2019.

To determine

Concept Introduction:

Financial statements: Financial statements are prepared to summaries the account at the end of the period. The statements prepared are Income statement, Balance sheet, Statement of owner’s equity and Cash flows statements.

Statement of Retained earnings:

Items reported on a retained earnings statement are explained as follows:

• Beginning Balance of Retained earnings is the ending balance of the retained earnings of the previous year
• Net Income or Net loss is the amount of net income earned or net loss incurred for the year.
• Dividends Paid are taken for the year.
• Ending Balance of Retained earnings is calculated as follows:

Ending Balance of Retained earnings = Beginning Balance of Retained earnings + Net Income − Net income − Dividends Paid

Requirement-2

To Discuss:

The dividend policy of the company,