Powder Corporation began operations on January 2, 2013, with a total investment of $150,000 by its stockholders.
Net income for its first year of business was $90,000. During 2014 and 2015, net income increased to $188,000 and to $217,000, respectively. Powder paid $85,000 in dividends to its shareholders in each of the three years.
A In good form, prepare a statement of retained earnings for the year ended December 31, 2014.
B How much is total retained earnings on December 31, 2015?
C Explain the link between the statement of retained earnings and the balance sheet.

Question

Quizplus · Accepted Answer

The Answer of Powder Corporation began operations on January 2, 2013, with a total investment of $150,000 by its stockholders.
Net income for its first year of business was $90,000. During 2014 and 2015, net income increased to $188,000 and to $217,000, respectively. Powder paid $85,000 in dividends to its shareholders in each of the three years.
A In good form, prepare a statement of retained earnings for the year ended December 31, 2014.
B How much is total retained earnings on December 31, 2015?
C Explain the link between the statement of retained earnings and the balance sheet.

Powder Corporation Began Operations on January 2, 2013, with a Total