Question

For the year ended December 31, 2020, Cullumber Company reported the following: Net income $305000 Preferred dividends declared 50500 Common dividend declared 9100 Unrealized holding loss, net of tax 4800 Retained earnings, beginning balance 420000 Common stock 199400 Accumulated Other Comprehensive Income, Beginning Balance 24400 What would Cullumber report as the ending balance of Retained Earnings

Answer 1

$665,400

Step-by-step explanation:

The ending retained earnings are computed by taking the beginning retained earnings alongside the net income for the year while adjusting for both common and preferred stocks dividends

The ending retained earnings=beginning retained earnings+Net income-Preferred dividends-Common dividends

Unrealized holding loss would only have an impact on Accumulated Other Comprehensive Income.

The ending retained earnings=420000+305000-50500-9100

The ending retained earnings=$665,400

balance in Accumulated Other Comprehensive Income=24400-4800=$19,600