zto mheducationcom ACCT 201 Reveiw Question 7 of 15 200 poin

zto mheducation.com ACCT 201 Reveiw Question 7 (of 15) 2.00 points On October 1, Keisha King organized Real Answers, a new consulting fim on October 3, the owner contributed $59.860 cash. On October 31, the company\'s records show the following items and amounts. $ 2,000 19,000 3,420 7,600 760 580 10,400 Cash dividends Cash Accounts receivable 17,000 Consulting fees eamed Office supplies Land Office equipment Accounts payable Common stock 22,100 Rent expense 36,000 Salaries expense 18,000 Telephone expense 59,860 Using the above information prepare an October statement of retained eamings for Real Answers REAL ANSWERS Statement of Retained Earnings

Solution

Calculation of Retained Earnings for Real Answer;

Retained Earnings refer to the earnings remaining with the Company after declaration and payment of Dividend. In the given case Retained Earnings are as under;

Consultancy Fees Earned during the Period = $ 19,000

Less: Expenses incurred during the period = $ 12,360

(Salary = $ 7,600, Rent = $ 3,420, Telephone = $ 760, Misc. = $ 580)

Profit = $ 6,640

Less: Dividend = $ 2,000

Retained Earnings = $ 4,640

Note: Cash contribution from Owner less cash paid during the period matches with Closing Cash $ 10,400.

Note: Since, no information of tax rate is given hence we have ignored the Tax calculations.