Final answer:
The Statement of Retained Earnings reports a company's retained earnings over a period. For Towing Service, calculate by adding net income to the beginning balance and then subtract dividends paid to find the ending balance for the month.
Step-by-step explanation:
The statement of retained earnings is a financial report that outlines the changes in retained earnings for a company over a specific period. To prepare the statement for Towing Service for the month, you will need to start with the beginning retained earnings balance, add net income (or subtract net loss) for the month, and then subtract any dividends that were paid out during the month. The final result will be the ending retained earnings for that period.
Example:
- Beginning Retained Earnings: $10,000
- Add: Net Income for the Month: $5,000
- Less: Dividends Paid: $1,000
Ending Retained Earnings Calculation:
$10,000 + $5,000 - $1,000 = $14,000
Therefore, the Statement of Retained Earnings for Towing Service would show an ending retained earnings balance of $14,000 for the month.