During 2012, Vadercorp Ltd performed services for which customers paid or promised to pay $286,000. Of the amount, $270,000 had been collected by year end.
Vadercorp paid $125,000 in cash for employee wages and owed the employees $5,000 at the end of the year for work that had been done but had not paid for. Vadercorp paid interest expense of $1,700 and $80,000 for other service expenses. The income tax rate was 25%, and income taxes had not yet been paid at the end of the year.
Vadercorp declared and paid dividends of $6,000. There were no other events that affected cash. required: 1Prepare an income statement for Vadercorp for the year. 2At the start of 2012, Vadercorp reported retained earnings totaling $940,000. Prepare a statement of retained earnings.
IMPORTANT INFO:
The Statement of Retained Earnings, or Statement of Owner’s Equity, is an important part of your accounting process. Retained earnings represent the amount of net income or profit left in the company after dividends are paid out to stockholders. The company can then reinvest this income into the firm.
The statement of retained earnings can be prepared as its own, standalone schedule, but many companies also append it to the bottom of another statement, such as the balance sheet.
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