Question

Required information

Use the following information below. [The following information applies to the questions displayed below.]
Carmen Camry operates a consulting firm called Help Today, which began operations on August 1. On August 31, the company’s records show the following selected accounts and amounts for the month of August.
Cash $ 25,460
Dividends $ 6,130
Accounts receivable 22,510
Consulting fees earned 27,130
Office supplies 5,380
Rent expense 9,690
Land 44,130
Salaries expense 5,710
Office equipment 20,160
Telephone expense 1,010
Accounts payable 10,370
Miscellaneous expenses 620
Common stock 103,300
Preparing a statement of retained earnings LO P3 Use the above information to prepare an August statement of retained earnings for Help Today. The Retained Earnings account balance at August 1 was $0. Hint: Net income for August is $10,100.

Answer 1

To prepare a statement of retained earnings for Help Today, start with the initial balance, add the net income for August, and subtract dividends. The result is an ending retained earnings balance of $3,970 for the month.

Step-by-step explanation:

Statement of Retained Earnings for Help Today

Retained Earnings, August 1: $0

Add: Net Income for August (Consulting fees earned - Total Expenses): $10,100

Less: Dividends paid: $6,130

Retained Earnings, August 31: $3,970

To calculate the Statement of Retained Earnings for Help Today, you must start with the beginning balance of retained earnings, which in this case, is $0 as it's a new company. You then add the net income, which is provided in the hint as $10,100, and subtract any dividends paid out to shareholders, which are listed as $6,130. After performing these calculations, the ending retained earnings for the month of August would be $3,970.