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College AccountingCollege Accounting
Heintz & ParryHeintz & Parry2020thth Edition Edition
Heintz & ParryHeintz & Parry2020thth Edition Edition
ChapterChapter 2121
Corporations: Taxes, Earnings, Distributions,
and the Retained Earnings Statement
Corporations: Taxes, Earnings, Distributions,
and the Retained Earnings Statement
1
Account for corporate
income taxes.
CORPORATE INCOME TAXESCORPORATE INCOME TAXES
• A disadvantage of corporations is that they must pay income taxes
• Corporations estimate their annual income and make quarterly payments
• At the end of accounting period, the actual amount of income tax is determined– If it differs from estimates, an adjusting
entry is made
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
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10
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EXAMPLE:If the corporation estimates its income
taxes for 20-1 will be $160,000…
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
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Income Tax Expense 40,000
Cash 40,000
…quarterly payments will be madeon April 15, June 15, September 15,
and December 15.($160,000 ÷ 4 = $40,000)
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
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Income Tax Expense 40,000
Cash
The same entry ismade each quarter.
40,000
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
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At the end of the year, actual incometaxes are calculated as $163,000,or $3,000 more than estimated.
An adjusting entry is needed.
Income Tax Expense 3,000
Income Tax Payable 3,000
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
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7
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9
10
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Income Tax Payable 3,000
Cash 3,000
An additional $3,000 is paid when a tax return is filed in the following period.
2
Explain the use of the
retained earnings account.
THE RETAINED EARNINGS ACCOUNTTHE RETAINED EARNINGS ACCOUNT
Retained Earnings
Very few transactionsaffect the retainedearnings account.
THE RETAINED EARNINGS ACCOUNTTHE RETAINED EARNINGS ACCOUNT
Retained Earnings
Usually the onlycredit is for net income.
Net income
THE RETAINED EARNINGS ACCOUNTTHE RETAINED EARNINGS ACCOUNT
Retained Earnings
There are only three types of debits.
Net incomeNet lossDividends (closing)
Appropriations
CASH DIVIDENDSCASH DIVIDENDS
EXAMPLE: On February 1, the board of directors declares a dividend of $4 per share
on 4,000 shares of preferred stock and a dividend of $2 per share on 10,000 shares of
common stock. Both dividends are payable on February 20 to stockholders of record on
February 10. DATE OF RECORD:Stockholders who own the
stock on the date of record will receive the dividend,
regardless of whether they owned the stock on the date of declaration or on the date of
payment.
SMALL STOCK DIVIDENDSMALL STOCK DIVIDEND
EXAMPLE: Diven Corp. has 4,000 share of $5 par common stock outstanding.
Diven declares a 10% stock dividend on March 5, payable on March 27 to
stockholders of record on March 14. The market value of Diven’s common stock
on the date of declaration is $12 per share.4,000
shares to be distributed 10%
400
APPROPRIATIONSAPPROPRIATIONS
EXAMPLE: Chem Corp. has decided to build a new waste treatment plant. Chem Corp. has a retained earnings balance of $900,000. To finance a portion of the plant (and to inform
people of its concern for the environment), the board of directors decides to appropriate $600,000 of retained earnings over a three-year
period.Let’s look atthe journal entry.
CLOSING ENTRIESCLOSING ENTRIES
1. Close revenue accounts to Income Summary– The same entry as sole proprietorships and
partnerships
2. Close expense accounts to Income Summary– The same entry as sole proprietorships and
partnerships
3. Close Income Summary to Retained Earnings– Credit balance in Income Summary = net
income – Debit balance in Income Summary = net loss
4. Close Dividends to Retained Earnings
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
8
9
10
11
Income Summary 337,000
Retained Earnings
Closing Entry #3 EXAMPLE:The corporation has net income
of $337,000 for the period.
337,000
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
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Income Summary
52,000Retained Earnings
What if the corporationhas a net loss of $52,000?
52,000
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
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Dividends
30,000Retained Earnings
Closing Entry #4 EXAMPLE:The corporation declares
$30,000 in dividends.
30,000
3Account for dividends and
stock splits.
CASH DIVIDENDSCASH DIVIDENDS
• A distribution of corporate assets (cash) to stockholders
• To be issued if corporation has:– Unrestricted retained earnings– An adequate cash balance– Declared a cash dividend
• Only the board of directors can declare a dividend
• Three key dates:– Date of declaration– Date of record – Date of payment
CASH DIVIDENDSCASH DIVIDENDS
EXAMPLE: On February 1, the board of directors declares a dividend of $4 per share on 4,000
shares of preferred stock, and a dividend of $2 per share on 10,000 shares of common stock. Both dividends are payable on February 20 to
stockholders of record on February 10.
DATE OF DECLARATION:
4,000 shares $4$16,000
10,000 shares
$2$20,000
Preferred Stock Common Stock
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
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7
8
9
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Cash Dividends 16,000
Preferred Dividends Payable
Separate entries are madefor each type of stock.
16,000
Feb. 1
1 Cash Dividends
Common Dividends Payable
20,000
20,000
20--
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
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16,000Preferred Dividends Payable
Date of Payment
16,000
Feb. 20
20 Common Dividends Payable 20,000
20,000
Cash
Cash
20--
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
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7
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9
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Cash Dividends xxx
Dividends Payable xxx
Dividends Payable
Cash
xxx
xxx
How do cashdividend entries affect
total assets?
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
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9
10
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Cash Dividends xxx
Dividends Payable xxx
Dividends Payable
Cash
xxx
xxx
Total assetsdecrease
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
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Cash Dividends xxx
Dividends Payable xxx
Dividends Payable
Cash
xxx
xxx
How do cash dividend entries affectpaid-in capital?
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
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7
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9
10
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Cash Dividends xxx
Dividends Payable xxx
Dividends Payable
Cash
xxx
xxx
No effect
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
8
9
10
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Cash Dividends xxx
Dividends Payable xxx
Dividends Payable
Cash
xxx
xxx
How do cash dividend entries affectretained earnings?
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
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9
10
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Cash Dividends xxx
Dividends Payable xxx
Dividends Payable
Cash
xxx
xxx
Decrease (remember the Cash Dividends account
is closed to Retained Earnings).
STOCK DIVIDENDSSTOCK DIVIDENDS
• A proportionate distribution of shares of a corporation’s own stock to its stockholders
• Several reasons for this type of dividend:– The company may be short of cash– The company may want to increase the
marketability of its shares by lowering the price per share
– The corporation may want to transfer a portion of retained earnings to a paid-in capital category to indicate that it is unavailable for dividends
STOCK DIVIDENDSSTOCK DIVIDENDS
• Typically stated as a percentage of common stock outstanding
• The date of declaration journal entry varies depending on the dividend percentage– Dividends for less than 20–25% (small)
• Stock Dividend is debited for the market value of the stock
– Dividends for more than 20–25% (large)• Stock Dividend is debited for the par or stated value
of the stock
SMALL STOCK DIVIDENDSMALL STOCK DIVIDEND
EXAMPLE: Diven Corp. has 4,000 share of $5 par common stock outstanding.
Diven declares a 10% stock dividend on March 5, payable on March 27 to
stockholders of record on March 14. The market value of Diven’s common stock
on the date of declaration is $12 per share.
4,000
shares to be distributed 10%
400
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
8
9
10
11
Stock Dividends 4,800
Small stock dividends:The stock dividend account is debited
for the market value of the sharesto be distributed.
(400 shares $12 market value)
Mar. 520--
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
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9
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Stock Dividends 4,800
Stock Div. Distributable
Stock Dividends Distributable is credited for the par value.(400 shares $5 par value)
2,000
Mar. 520--
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
8
9
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Stock Dividends 4,800
Stock Div. Distributable
The Stock Dividends Distributable account is credited for the par value and reported as an addition to common stock on the balance sheet.
The Paid-in Capital in Excess of Par account is credited for the difference between
market value and par value.
2,000
Mar. 5
Paid-In Capital in Excess
of Par—Common Stock 2,800
20--
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
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9
10
11
Stock Dividends 4,800
Stock Div. Distributable 2,000
Mar. 5
Paid-In Capital in Excess
of Par—Common Stock 2,800
27 Stock Div. Distributable 2,000
Common Stock 2,000
The new shares of stock are distributed to stockholders on March 27.
20--
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
8
9
10
11
Stock Dividends xxx
Stock Div. Distributable
Distribution of stock dividend (small)
to stockholders
xxxAt
declaration
Paid-In Capital in Excess
of Par—Common Stock xxx
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
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9
10
11
Stock Dividends xxx
Stock Div. Distributable xxx
At distribution
Paid-In Capital in Excess
of Par—Common Stock xxx
Stock Div. Distributable
Common Stock
xxx
xxx
How do small stock dividend entries affect the assets?
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
8
9
10
11
Stock Dividends xxx
Stock Div. Distributable xxx
Paid-In Capital in Excess
of Par—Common Stock xxx
Stock Div. Distributable
Common Stock
xxx
xxx
No effect
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
8
9
10
11
Stock Dividends xxx
Stock Div. Distributable xxx
Paid-In Capital in Excess
of Par—Common Stock xxx
Stock Div. Distributable
Common Stock
xxx
xxx
How do small stock dividend entries affect total paid-in capital?
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
8
9
10
11
Stock Dividends xxx
Stock Div. Distributable xxx
Paid-In Capital in Excess
of Par—Common Stock xxx
Stock Div. Distributable
Common Stock
xxx
xxx
Total paid-in capital is increased by market value.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
8
9
10
11
Stock Dividends xxx
Stock Div. Distributable xxx
Paid-In Capital in Excess
of Par—Common Stock xxx
Stock Div. Distributable
Common Stock
xxx
xxx
How do small stock dividend entries affect retained earnings?
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
8
9
10
11
Stock Dividends xxx
Stock Div. Distributable xxx
Paid-In Capital in Excess
of Par—Common Stock xxx
Stock Div. Distributable
Common Stock
xxx
xxx
Retained earnings is decreased bymarket value (remember Stock Dividends
are closed to Retained Earnings).
LARGE STOCK DIVIDENDLARGE STOCK DIVIDEND
• Recorded similarly to the small stock dividend, except:– The stock dividend account is debited
for the par value instead of the market value
– Stock dividends distributable are recorded at par value
– Since both the debit and credit are the same (par value), there is no need for the paid-in capital in excess of par— common stock account
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
8
9
10
11
Stock Dividends xxx
Stock Div. Distributable
Distribution of stock dividend (large)
to stockholders
xxxAt
declaration
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
8
9
10
11
Stock Dividends xxx
Stock Div. Distributable xxx
Atdistribution
Stock Div. Distributable
Common Stock
xxx
xxx
How do large stock dividend entries affect the assets?
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
8
9
10
11
Stock Dividends xxx
Stock Div. Distributable xxx
Stock Div. Distributable
Common Stock
xxx
xxx
No effect
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
8
9
10
11
Stock Dividends xxx
Stock Div. Distributable xxx
Stock Div. Distributable
Common Stock
xxx
xxx
How do large stock dividend entriesaffect paid-in capital?
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
8
9
10
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Stock Dividends xxx
Stock Div. Distributable xxx
Stock Div. Distributable
Common Stock
xxx
xxx
Increase bypar value
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
8
9
10
11
Stock Dividends xxx
Stock Div. Distributable xxx
Stock Div. Distributable
Common Stock
xxx
xxx
How do large stock dividend entries affect retained earnings?
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
8
9
10
11
Stock Dividends xxx
Stock Div. Distributable xxx
Stock Div. Distributable
Common Stock
xxx
xxx
Decrease by par value
STOCK SPLITSSTOCK SPLITS
• The exchange of one share of an old issue of stock for multiple shares of a new issue with a reduced par or stated value– Example: Splice Corp. has 10,000 shares of
$10 par common stock outstanding. Splice declares a two-for-one stock split
• Why?—To improve marketability of the shares by reducing par value, leading to wider ownership of the stock
• Each shareholder will receive two shares of the new $5 par value stock in return for each share of the old $10 par value stock
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
8
9
10
11
Memo notation
Stock split:The exchange of old stock formultiple shares of new stock
No journal entry; justa memo in the journal
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
8
9
10
11
Memo notation
Because there is no entry, there is no effect on assets, paid-in capital, or
retained earnings.
4
Account for appropriations
of retained earnings.
APPROPRIATIONSAPPROPRIATIONS
• A restriction of retained earnings by the board of directors for a specific purpose
• Used primarily to limit the availability of retained earnings for paying dividends
• Does not affect total retained earnings– Just separates it into “appropriated” and
“unappropriated”
• Does not affect cash or other assets
APPROPRIATIONSAPPROPRIATIONS
EXAMPLE: Chem Corp. has decided to build a new waste treatment plant. Chem Corp. has a retained earnings balance of $900,000. To finance a portion of the plant (and to inform
people of its concern for the environment), the board of directors decides to appropriate $600,000 of retained earnings over a three-year
period.Let’s look atthe journal entry.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
8
9
10
11
Retained Earnings
$600,000 ÷ 3 years The same entry is made at theend of each of the three years.
Retained Earnings Approp.
for Treatment Plant
200,000
200,000
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Retained Earnings Section of the Balance Sheet
Retained earnings:Appropriated for treatment plant $200,000Unappropriated 700,000Total retained earnings $900,000
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GENERAL JOURNALGENERAL JOURNAL
DATE DESCRIPTION PR DEBIT CREDIT
1
2
3
4
5
6
7
8
9
10
11
Retained Earnings Approp.
for Treatment Plant
After the treatment plant is completed, the appropriation
is no longer needed.
Retained Earnings
600,000
600,000
5
Prepare a retained
earnings statement.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
$1,100,000Retained earnings, January 1
$30,000
Add net income for the year 280,000
Less: Cash dividendsStock dividends 20,000 50,000
Retained earnings, December 31
$1,380,000
$1,330,000
Similar to the statement of owner’s equity
Sample Corporation Retained Earnings Statement
For Year Ended December 31, 20--
Sample Corporation Retained Earnings Statement
For Year Ended December 31, 20--
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
$200,000Appropriated:
$700,000
Appropriated for treatment plant, Jan. 1200,000
Retained earnings appropriated, Dec. 31Unappropriated:
280,000
200,000
Balance, January 1
$ 400,000Current year appropriation (see below)
Add net income for the yearLess: Cash dividends $ 30,000
$980,000
Stock dividends 20,000Transfer to approp. for treatment plant 250,000Ret. earnings unappropriated, Dec. 31 730,000
Total retained earnings, December 31 $1,130,000
Chem Corporation Retained Earnings Statement For Year Ended December 31, 20-2
Chem Corporation Retained Earnings Statement For Year Ended December 31, 20-2
Appropriated retained earnings are presented first, followed by
unappropriated.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
$200,000Appropriated:
$700,000
Appropriated for treatment plant, Jan. 1200,000
Retained earnings appropriated, Dec. 31Unappropriated:
280,000
200,000
Balance, January 1
$ 400,000Current year appropriation (see below)
Add net income for the yearLess: Cash dividends $ 30,000
$980,000
Stock dividends 20,000Trans. to approp. for treatment plant 250,000Ret. earnings unappropriated, Dec. 31 730,000
Total retained earnings, December 31 $1,130,000
Chem Corporation Retained Earnings Statement For Year Ended December 31, 20-2
Chem Corporation Retained Earnings Statement For Year Ended December 31, 20-2
Current year appropriations are shown twice.