Ask Experts Questions for FREE Help !
Ask
    marylincathey's Avatar
    marylincathey Posts: 8, Reputation: 1
    New Member
    		  
    #1

    Jul 22, 2009, 01:30 AM
    Retained earnings
    Mags & Wheels, Inc reported Retained Earnings of $20, 000 at year-end 2007. The accomping income statement reported $2000 in revenues for 2007 and $1000 in expenses. The biginning 2007 balance of retained Earnings must have been what?
    marylincathey's Avatar
    marylincathey Posts: 8, Reputation: 1
    New Member
    		  
    #2

    Jul 22, 2009, 01:30 AM

    I guest $10000. Please help?
    teonguyen's Avatar
    teonguyen Posts: 12, Reputation: 1
    New Member
    		  
    #3

    Jul 22, 2009, 02:05 AM

    I think 10000$ is wrong , but I just can't give u the answer because the rule of this forum.However , I can give the idea how to get the amount of beginning retained earning.

    INCOME STATEMENT
    Service revenue...
    Less expense (... )
    =Net income...

    Then ,
    STATEMENT OF RETAINED EARNING
    Beginning of Retained Earning...
    Plus Net Income...
    Less Dividends (... )
    =Ending Retained Earning...

    here the link ,http://www.principlesofaccounting.com/chapter%201.htm
    marylincathey's Avatar
    marylincathey Posts: 8, Reputation: 1
    New Member
    		  
    #4

    Jul 22, 2009, 02:28 AM

    I came up with 30,000 with the outine sample you gave me is this correct?
    teonguyen's Avatar
    teonguyen Posts: 12, Reputation: 1
    New Member
    		  
    #5

    Jul 22, 2009, 02:46 AM

    I don't know how you came up with 30 .000$.They gave the ending retained earning of 20000$, and want you to solve for beginning retained earning..

    INCOME STATEMENT
    Revenue:... 2000
    Expense:... (1000)
    =Net Income:... 1000

    Now the net income will go to the statement of retained earning

    STATEMENT OF RETAINED EARNING
    Beginning of Retained Earning..?
    Plus Net Income... 1000
    Less Dividends... (... ) in this case we have no dividend
    Ending Retained Earning... 20.000

    Now solve for "???" do a little math here (?? + 1000-0=20000)=>?? =20.000-1000=19000$
    marylincathey's Avatar
    marylincathey Posts: 8, Reputation: 1
    New Member
    		  
    #6

    Jul 22, 2009, 02:53 AM

    I don't know how you came up with 30 .000$.They gave the ending retained earning of 20000$, and want you to solve for beginning retained earning..

    INCOME STATEMENT
    Revenue:... 20000
    Expense:... (10000)
    =Net Income:... 10000

    Now the net income will go to the statement of retained earning

    STATEMENT OF RETAINED EARNING
    Beginning of Retained Earning... 20000
    Plus Net Income... 10000
    Less Dividends... (... ) in this case we have no dividend
    Ending Retained Earning... 30000

    Now solve for "???" do a little math here (10000? + 20000=30000)
    is this correct?
    teonguyen's Avatar
    teonguyen Posts: 12, Reputation: 1
    New Member
    		  
    #7

    Jul 22, 2009, 03:04 AM
    Yes Mary,it is correct.
    The data in question you posted,you reported Revenue:2000$ and Expense : 1000$. Now this one, you have changed the amount of revenue and expense up to 10 times.That s why I did not know how you cam up with 30.000$.. Anyway hope it helps
Not your question? Ask your question View similar questions
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Retained Earnings = Earnings less dividends [ 5 Answers ]

Could someone confirm that's the correct definition of R.E. I thought R.E. is net not pay out dividend but my professor has in his note as "Retained Earnings = Earnings less dividends"

Calculating net earnings and preparing statement of retained earnings [ 2 Answers ]

I just started my introduction to accounting class in university and I am a little stuck on this question because we didn't really go over this is class... please help! Here is the information given: Sea Surf Campground is a public camping ground in Ocean National Park. It has the following...

Earnings per share and retained earnings [ 2 Answers ]

I am confused on how to calculate the earnings per share and the common dividend per share as well as figure out what the increased retained earnings for the year. The problem states that the company had an operating profit of $210,000. Interest expense for the year was $30,000; preferred...

Retained earnings [ 1 Answers ]

How do I start to figure out how to do retained earnings of an asset? I have taken accounting 1,2,3 already but it has been a few quarters. I am now taking Intermediate accounting 1 and 2 online and having some problems. Please someone help me. Susan

View more questions Search