Question

For the year ended December 31, 2020, Parson Corporation reported the following:

Net income $300,000

Preferred dividends declared 50,000

Common dividend declared 10,000

Unrealized holding loss, net of tax 5,000

Retained earnings, beginning balance 400,000

Common stock 200,000

Accumulated Other Comprehensive Income, Beginning Balance 25,000

A. Prepare a Statement of Retained Earnings for Parson Corporation in good form.

B. Prepare the Stockholders’ Equity section of Parson Corporation’s Balance Sheet in good form.

Answer 1

Ans:

Statement of Retained Earnings
Retained earnings, beginning balance	400,000
Net income	300,000
Preferred dividends declared	-50,000
Common dividends declared	-10,000
Retained earnings, ending	$640,000

Accumulated other comprehensive income, ending = Accumulated other comprehensive income, ending- Unrealized holding loss, net of tax

= 25,000-5,000

= $20,000

Stockholder Equity Section
Common stock	200,000
Retained earnings, ending	640,000
Accumulated other comprehensive income, ending	20,000
Total Stockholders Equity	860,000

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