Chapter 14, Problem 11Q

To determine

Retained Earnings: The profit of the company which is retained for further business operations is called as retained earnings.

Prior Period Adjustment: The rectification of those errors or mistakes which were committed earlier in financial statements is called as prior period adjustment.

Cash Dividend: The amount that shareholders receive in cash in return of their investment is called as cash dividend. Company provides return to its shareholders by paying dividend which is out of profit of the company.

Stock Dividend: When the company has fewer amounts of cash, it pays dividend to the shareholders in the form of extra shares in place of of cash payment. This payment is termed as stock dividend.

To determine: The events that result in debits and credits of retained earnings.