If the ONLY given information is the company's issued stock (common and preferred) and NO OTHER figures or information is given (such as net income, losses or dividends paid).

I can't calculate the Retained earnings if these other information is not provided so the Stock Holder's equity section of the balance sheet will not include RETAINED EARNINGS?

Thank you

The only way that would happen is a new company that has not closed its books at year-end yet.

Retained earnings is essentially what it says: earnings that are retained in the company. Meaning, the net income less any dividends declared. That number gets left in there and carries into the next year, so it's also an accumulation. That is, you won't see just one year in there -- unless it's the first year.

So for nothing to be there could only mean a new company that hasn't closed its books yet.

The only other way that could happen is the 1 in a gazillionth chance that somehow the accumulated retained earnings, combined with net income and dividends just happened to end up zero.

I don't think so.

You are correct that none of that can be calculated if you aren't given any figures. However... sometimes problems like to give you stuff and make you work backwards to figure other stuff out. For instance, give you beginning and ending balances of retained earnings and make you figure out net income. But that only works if there's no dividends, or they give you either net income or dividends. You can't solve for two missing numbers.

Unless this is a new company and this is just beginning balances or something, I don't get it either.

But one last word: 95% of the time when someone tells me that NO OTHER information is given, there's something else given. Look very, very carefully. There might even be other information that could help lead you to it. Posting all the info would help. Or, I have a few textbooks around, if you want to state the book, author and what problem it is. (No guarantees there cause I only have a few common books and there's 3 trillion other ones out there.)

Thanks a million for taking the time to help me! Your answer is very very clear. The professor gave me only 2 journal entries (for the 2 type of stock issued) and that's it. Then then he asked to do the SH Equity as it happened right after the company issued the stock so I think your answer makes sense.
I don't have any previous journal entries history, neither any other info.
Thank you so so much!

:):)

Quote:

---

Originally Posted by morgaine300

The only way that would happen is a new company that has not closed its books at year-end yet.

Retained earnings is essentially what it says: earnings that are retained in the company. Meaning, the net income less any dividends declared. That number gets left in there and carries into the next year, so it's also an accumulation. That is, you won't see just one year in there -- unless it's the first year.

So for nothing to be there could only mean a new company that hasn't closed its books yet.

The only other way that could happen is the 1 in a gazillionth chance that somehow the accumulated retained earnings, combined with net income and dividends just happened to end up zero.

I don't think so.

You are correct that none of that can be calculated if you aren't given any figures. However... sometimes problems like to give you stuff and make you work backwards to figure other stuff out. For instance, give you beginning and ending balances of retained earnings and make you figure out net income. But that only works if there's no dividends, or they give you either net income or dividends. You can't solve for two missing numbers.

Unless this is a new company and this is just beginning balances or something, I don't get it either.

But one last word: 95% of the time when someone tells me that NO OTHER information is given, there's something else given. Look very, very carefully. There might even be other information that could help lead you to it. Posting all the info would help. Or, I have a few textbooks around, if you want to state the book, author and what problem it is. (No guarantees there cause I only have a few common books and there's 3 trillion other ones out there.)

---