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Carmen Camry operates a consulting firm called Help Today, which began operations on August 1. On August, the company's records show the following accounts and amounts for the month of August.Cash 25,370Accounts receivable 22,370Office supplies 5,260Land 44,010Office equipment 20,020Accounts payable 10,540Dividends 6,020Consulting fees earned 27,010Rent expense 9,570Salaries expense 5,620Telephone expense 880Miscellaneous expenses 530Conmon stock 102,100Use the above information to prepare an August statement of retained earnings for Help Today (Hint Net income: $10,410)

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Answer:

                                 Help Today

                  Statement  of Retained Earnings

            For the Month Ended on August 31, 202X

Retained earnings at the beginning of the period:          $0

Net income:                                                                 $10,410

Dividends:                                                                  ($6,020)

Retained earnings at the end of the period             $4,390

Explanation:

Balance Sheet

Assets:

Cash $25,370

Accounts receivable $22,370

Office supplies $5,260

Land $44,010

Office equipment $20,020

Total assets: $117,030

Liabilities and Equity:

Accounts payable $10,540

Common stock $102,100

Total liabilities and equity: $112,640

Retained earnings ⇒ assets - (liabilities + equity) = $117,030 - $112,640 = $4,390

Another way to calculate retained earnings = net income - dividends = $10,410 - $6,020 = $4,390

Dividends 6,020

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