Question

Q1. From the information given, prepare a statement of retained earnings.

ABC corporation had an initial investment of SAR50,000 cash and other information was as follows:

Accounts payable	SAR12,000	Office furnishings	SAR40,000
Accounts receivable	23,000	Dividends	6,000
Cash	17,200	Rent expense	3,600
Fees earned	30,000	Salaries expense	6,200
Notes payable	4,250	Telephone expense	250

Answer 1

• Requirement

Statement of retained earnings
Retained earnings - Beginning balance	SAR 0
Add: Net Income [see working below]	SAR 19,950
	SAR 19,950
Less: Dividends	SAR 6,000
Retained earnings - Ending balance	SAR 13,950

--Working

Revenues:
Fees earned	SAR 30,000
Expenses:
Rent Expense	SAR 3,600
Salaries expense	SAR 6,200
Telephone expense	SAR 250
Total expense	SAR 10,050
Net Income	SAR 19,950