Question

Panther Marine

Instructions: Using the "June 30, 2017 adjusted trial balance" information AND income statement complete the statement of retained earnings. Round all amounts to the nearest cent. The rest of the formatting is up to the student. Note that grades are based on organization and clarity of this financial statement. The only other requirements are the following items:

a. ONLY use accounts that have adjusted balances

b. Proper report title

c. Net increase or decrease in retained earnings

d. Beginning balance July 1, 2016 (Hint: this is not the same as June 30, 2016 balance)

e. Cash dividends and net income (loss)

		June 30, 2016				June 30, 2017
		Adjusted				Adjusted
		Trial Balance		Changes		Trial Balance
Acct. No.	Account Title	Dr.	Cr.	Debit	Credit	Dr.	Cr
100	Cash	562,480.00			183,490.91	378,989.09
102	Accounts Receivable	822,633.00			67,233.00	755,400.00
103	Allowance for Doubtful Accounts		25,643.00	5,826.11			19,816.89
104	Merchandise Inventory	440,980.00			94,630.00	346,350.00
105	Estimated Returns Inventory	56,450.00			12,909.00	43,541.00
106	Office Supplies	1,250.00		1,215.00		2,465.00
107	Prepaid Insurance	12,500.00			2,000.00	10,500.00
120	Investments - Trading	45,000.00		15,000.00		60,000.00
121	Investments - Available for Sale	14,650.00		11,800.00		26,450.00
122	Investments - Held to Maturity	23,850.00		16,155.01		40,005.01
123	Valuation Allowance	27,000.00			62,000.00		35,000.00
140	Land	1,743,777.65		761,777.36		2,505,555.01
145	Building	1,893,723.48			50,000.00	1,843,723.48
146	Accumulated Depreciation - Building		1,504,955.01				1,500,000.00
151	Equipment	51,000.00		10,000.00		61,000.00
152	Accumulated Depreciation - Equipment		28,000.00				30,000.00
153	Office Furniture	32,500.00			10,000.00	22,500.00
154	Accumulated Depreciation - Office Furniture		3,500.00				4,500.00
201	Accounts Payable		1,156,000.00	251,150.00			904,850.00
202	Wages Payable		-				-
203	Interest Payable		-				-
204	Dividends Payable		-				-
205	Unearned Rent		6,000.00	2,000.00			4,000.00
206	Customer Refunds Payable		35,682.00	6,654.60			29,027.60
250	Notes Payable		12,000.00		200,000.00		212,000.00
251	Bonds Payable		200,000.00		200,000.00		400,000.00
252	Premium on Bonds Payable		-				-
253	Discount on Bonds Payable	-				-
252	Mortgage (Warehouse) Payable		248,000.00	50,000.00			198,000.00
300	Common Stock, $1 Par, 100,000 Authorized; 65,500 shares Issued/Outstanding		50,000.00		15,500.00		65,500.00
301	Paid In Capital - Excess of Par		356,000.00		154,544.99		510,544.99
330	Retained Earnings		2,388,379.11				2,140,014.12
331	Cash Dividends	-		100,000.00		100,000.00
340	Treasury Stock	38,000.00			20,000.00	18,000.00
341	Unrealized (Gain) Loss Available for Sale Securities	-	-			-	-
500	Sales		1,142,580.00				1,468,529.98
600	Cost of Goods Sold	450,199.00				482,159.00
700	Wage Expense (hourly workers)	594,515.01				399,500.00
701	Salaries Expense (Exempt Staff)	89,000.00				129,000.00
702	Marketing Expense	65,000.00				75,000.00
703	Travel and Entertainment Expense	525.00				925.00
704	Bad Debt Expense	5,816.88				9,816.88
705	Property Tax Expense	111,104.10				-
706	Office Maintenance & Repair Expense	-				-
707	Legal Expenses	-				5,400.00
708	Insurance Expense	1,500.00				3,500.00
709	Utilities Expense	48,985.00				68,624.12
710	Office Supplies Expense	400.00				735.00
711	Telecommunications Expense	-				100.00
712	Depreciation Expense - Building	-				100,000.00
713	Depreciation Expense - Equipment	4,000.00				2,000.00
714	Depreciation Expense - Office Furniture	500.00				1,000.00
800	Rent Income		-				2,000.00
801	Unrealized Gain - Trading Securities		-				6,000.00
802	Realized Gain - Investment Securities		-				51,955.01
900	Interest Expense	5,400.00				12,500.00
901	Unrealized Loss - Trading Securities	10,000.00				68,000.00
902	Realized Loss - Investment Securities	4,000.00				9,000.00
	Total	7,156,739.120	7,156,739.120			7,581,738.590	7,581,738.590
		1,390,944.99	1,142,580.00			1,367,260.00	1,528,484.99
	Net Income (Loss)		(248,364.99)				161,224.99

Panther Marine
Multi-step Income Statement
For year ending June 30, 2017
Sales		$1,468,529.98
Cost of Goods Sold		($482,159)
Gross profit		$986,370.98
Operating Expenses;
Wage Expense	$399,500
Salaries Expense	$129,000
Marketing Expense	$75,000
Travel and Entertainment Expense	$925
Bad Debt Expense	$9,816.88
Legal Expenses	$5,400
Insurance Expense	$3,500
Utilities Expense	$68,624.12
Office Supplies Expense	$735
Telecommunications Expense	$100
Depreciation Expense - Building	$100,000
Depreciation Expense - Equipment	$2,000
Depreciation Expense - Office Furniture	$1,000
Total operating expenses		($795,601)
Operating income		$190,769.98
Non-operating or other items;
Rent Income	$2,000
Realized Gain - Investment Securities	$51,955.01
Interest Expense	($12,500)
Realized Loss - Investment Securities	($9,000)
Total non-operating or other items		$32,455.01
Net Income (Loss)		$223,224.99

Answer 1

Retained earnings are the net profits retained by the company and reinvested in business for business development.

A company may decide to distrubute all or some of the profits as dividends to its share holders. The profts which are held by the company with distributing are called retained earnings. Retained earnings appear on the Balance Sheet under Owners' equity.

The four primary financial statements that are to be published by the public companies are

(1) Income Statement

(2) Balance sheet

(3) Statement of changes in financial position (Cash flows)

(4) Statement of retained earnings