Question

Mondial Corporation prepares financial statements in accordance with ASPE. At December 31, 2019, the company had...

Mondial Corporation prepares financial statements in accordance with ASPE. At December 31, 2019, the company had retained earnings of $420,000. In 2020, net loss was $337,000, and cash dividends of $360,000 were declared but not paid.

Prepare a 2020 statement of retained earnings for Mondial Corporation.

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Answer #1

Retained earnings is calculated by adding current year profit to Opening Retained earnings and deducting Dividends declared from it.

Retained Earnings for Mondial Corporation for FY 2020 is calculated as below -

Retained Earnings on Dec 31, 2019 $ 4,20,000
Less - Current Year Loss (Loss in 2020) -$ 3,37.000
Less - Cash Dividend Declared -$ 3,60,000
Retained Earnings -$ 2,77,000

retained earning at the end of FY 2020 is negative $ 2,77,000. It can be called as accumulated Losses.

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