Question

for the year ended december 31, 2024, speedway farms limited, a private company, reported net income of $348,840. the company declared dividends of $124,200 and paid $81,000 of these dividends during the year. prepare a statement of retained earnings for the year, assuming the balance in retained earnings on january 1, 2024, was $550,800.

Answer 1

To prepare a statement of retained earnings, calculate the change in retained earnings using the formula: Beginning Retained Earnings + Net Income - Dividends.

Step-by-step explanation:

To prepare a statement of retained earnings, we need to consider the change in retained earnings for the year 2024. The formula for calculating retained earnings is:

Retained Earnings = Beginning Retained Earnings + Net Income - Dividends

Given that the beginning retained earnings on January 1, 2024, was $550,800, the net income for the year was $348,840, and the dividends declared were $124,200 (with $81,000 paid during the year), we can calculate the ending retained earnings as follows:

Retained Earnings = $550,800 + $348,840 - $81,000 = $818,640

Therefore, the statement of retained earnings for the year ended December 31, 2024, would show a final balance of $818,640.