Question

The retained earnings account of Kinney Kare had a beginning balance of 9,300. The business suffered a net loss of 2,850 for the year and did not pay any dividends as a result. Prepare the retained earnings statement if the company's year ends on September 30, 20Y5.

Answer 1

The retained earnings statement for Kinney Kare begins with a balance of $9,300 and, after adjusting for a net loss of $2,850 and no dividends, ends with $6,450 on September 30, 20Y5.

Step-by-step explanation:

To prepare the retained earnings statement for Kinney Kare as of September 30, 20Y5, we start with the beginning balance of retained earnings, then adjust for the net loss, and finally account for any dividends paid. However, since no dividends were paid, the only adjustment will be the net loss.

Here is the retained earnings statement:

Kinney Kare

Retained Earnings Statement

For the Year Ended September 30, 20Y5

• Beginning Retained Earnings, October 1, 20Y4: $9,300
• Net Loss: ($2,850)
• Dividends: $0
• Ending Retained Earnings, September 30, 20Y5: $6,450

The ending retained earnings are calculated by subtracting the net loss from the beginning retained earnings ($9,300 - $2,850 = $6,450). This amount is carried over to the balance sheet under shareholders' equity.