Chapter 14, Problem 14.3AP

(a)

To determine

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

T-Account: It is the account or graphical representation of general, ledger, account or its entries. The left side of T-account is debit side and the right side represents as credit side. The journal entries are posted to T-accounts.

Retained Earnings Statement: The statement which provides retained earning’s information over a period of time to the balance sheet is called as retained earnings statement. It shows changes in owner’s equity over a period of time.

Stockholder’s Equity: Shareholder’s equity is also known as owner’s equity. It is a part of balance sheet other than assets and liabilities. It indicates the capital contributed by the owner of business.

Dividend: The amount that shareholders receive in return of their investment is called as dividend. The distribution of net income of the Company to the shareholders in return of their investment is the dividend.

To prepare: Retained earnings T-account of S Company.

(b)

To determine

To prepare: The retained earnings statement of Company S.

(c)

To determine

To prepare: The stockholders’ equity section of the balance sheet at December 31, 2017.

(d)

To determine

The dividend paid to preferred and common stockholders for 2017.