Question

Comparative statements of retained earnings for Renn-Dever Corporation were reported in its 2018 annual report as follows. RENN-DEVER CORPORATION Statements of Retained Earnings For the Years Ended December 31, 2018 2017 2016 Balance at beginning of year $ 7,133,952 $ 5,789,052 $ 5,964,552 Net income (loss) 3,548,700 2,440,900 (175,500 ) Deductions: Stock dividend (38,000 shares) 266,000 Common shares retired (134,000 shares) 268,000 Common stock cash dividends 969,950 828,000 0 Balance at end of year $ 9,446,702 $ 7,133,952 $ 5,789,052 At December 31, 2015, common shares consisted of the following: Common stock, 1,940,000 shares at $1 par $ 1,940,000 Paid-in capital—excess of par 11,640,000

Answer 1

Date	Accounts Title	Dr	Cr
Dec 31 2016	Retained earnings	$175,500
	Income summary		$175,500
(being net loss closed to income summary)
Dec 31 2017	Income summary	$2,440,900
	Retained earnings		$2,440,900
(being net income closed to income summary)
Dec 31 2017	Retained earnings	$828,000
	Cash		$828,000
(being dividend account closed)
Dec 31 2017	Common Stock (134000*1)	$134,000
	paid in capital in excess of par (11640000/1940000*134000)	804000
	Retained earnings	268000
	Cash		$1,206,000
(being common stock retired)
Dec 31 2018	Income summary	$3,548,700
	Retained earnings		$3,548,700
(being net income closed to income summary)
Dec 31 2018	Retained earnings	$969,950
	Cash Dividend		$969,950
(being dividend account closed)
Dec 31 2018	Retained Eranings	$266,000
	Common Stock (38000*1)		$38,000
	paid in capital in excess of par (266000-38000)		228000
For cash dividend there can be two entries
Dec 31 2017	Retained earnings	$828,000
	Cash dividend payable		$828,000
	Cash dividend payable	$828,000
	Cash		$828,000
Dec 31 2018	Retained earnings	$969,950
	Cash dividend payable		$969,950
	Cash dividend payable	$969,950
	Cash		$969,950
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