Question

The CFO of Green Dating Service, Inc. has just collected the following data for December 31,...

The CFO of Green Dating Service, Inc. has just collected the following data for December 31, 2017.

Write a balance sheet and income statement.

Accounts Receivable 250,000

Accounts Payable 260,000

Capital Surplus 100,000

Cash 190,000

Common Stock 300,000

Costs 640,000

Depreciation Expense 40,000

Dividends 26,750

Net Furniture & Fixtures 200,000

Goodwill 180,000

Interest Expense 50,000

Inventory 175,000

Land 305,000

Line of Credit (used) 200,000

Long Term Loan 340,000

Retained Earnings ?

Sales 925,000

Tax rate 35%

Business   Finance   
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Answer #1

Solution :- Calculation of retained earnings in the given question :-

  Income statement

Particulars Amount ($)

Sales

(-) Costs

925000

640000

Gross profit

(-) Depreciation expense

285000

40000

Earnings before interest and tax (EBIT)

(-) Interest expense

245000

50000

Earnings before tax (EBT)

(-) Tax expense (35 % of 195000)

195000

68250
Net income 126750

Retained earnings = Net income - Dividend paid.

= 126750 - 26750

= $ 100000.

Conclusion :- Retained earnings for the Year ended December 31, 2017 = $ 100000.

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