Chapter 13, Problem E13.32E

To determine

Statement of Retained earnings:

The Statement of retained earnings is prepared by adding the net income during the period or deducting the net loss incurred during the period from the beginning balance of retained earnings.

The Dividend declared and paid during the period shall also be deducted while computing the ending balance in Retained earnings.

However, sometimes, there are past adjustment in expense or revenues or errors of past, which have been discovered in the current year, which would have an effect on previous incomes and ultimately on the retained earnings balance. Therefore, in such cases, the adjustment is required to be made in the beginning of the current year in which such errors or omissions are discovered to arrive at the true figure of Retained earnings in the beginning, had it there been no errors or adjustment in the past.

Requirement:

The Statement of Retained earnings to be prepared.