Question

Larkspur Inc. has recorded all necessary adjusting entries, except for income tax expense, at its fiscal year end, July 31, 2017. The following information has been taken from the adjusted trial balance:

Accounts payable		$26,000		Interest expense		$5,600
Cash dividends—common		57,000		Notes payable		120,000
Common shares		206,000		Retained earnings (Aug. 1, 2016)		309,400
Cost of goods sold		311,000		Salaries expense		133,000
Dividends payable		15,300		Sales		662,000
Income tax expense		29,900		Supplies expense		10,000
Income tax payable		2,700		Unearned revenue		12,100

All accounts have normal balances and total assets equal $807,000. Larkspur has a 29% income tax rate.

Prepare a statement of retained earnings

Answer 1

Answer:

Larkspur Inc.
Statement of Retained earnings
For the year ended July 31,2017
Retained earnings, August 1, 2016	$309,400
Add: Net income	$202,400
Balance	$511,800
(Less): Cash dividends-Common	($57,000)
Retained earnings, July 31,2017	$454,800

Calculations:

Income Statement
Sales		$662,000
Expenses:
Cost of goods sold	$311,000
Interest expense	$5,600
Salaries expense	$133,000
Supplies expense	$10,000
Total expenses		$459,600
Net income		$202,400