Explain the account called "Retained Earnings". What does it represent? What causes it to increase? What...

Explain the account called "Retained Earnings". What does it represent?

What causes it to increase?

What causes it to decrease?

Expert Solution

Solution:
	Retained earnings are the portion of Net income left after payment of dividends if any, accumulated as reserve during profitable period operations of business of Entity/Company. It is used by the organization for payments of dividends in coming years or reinvested in business operation in the form of Working capital, capital expenditure, or settlement of debt obligation.




	Retained Earnings are represents as portion of Stockholder's Equity and it is shown under Stockholders' Equity in Balance sheet of the Entity/Company.


	Closing Retained Earnings = Beginning Period Retained Earnings + Net Income or - Net Loss – Cash Dividends – Stock Dividends


	# Credits Causes to increase in retained earnings like Net income for the period , Prior period adjustment for understatement of net income.


	# Debits Causes to decrease in retained earnings like Net Loss , Prior period adjustment for overstatement of net income , Cash and stock dividends , Sale of treasure stock below cost.


Please feel free to ask if anything about above solution in comment section of the question.

jeff jeffy answered 1 year ago

What do retained earnings represent? Dividends are sometimes said to have been paid "out of retained...

What do retained earnings represent? Dividends are sometimes said to have been paid "out of retained earnings." What is the error, if any, in this statement? For what reasons might a company restrict a portion of its retained earnings? How are those restrictions reported?

Indicate the effect each account has on retained earnings. (increase, decrease, or no effect) a)advertising expense...

Indicate the effect each account has on retained earnings. (increase, decrease, or no effect) a)advertising expense b)Service revenue c) Insurance expense d) Salaries & Wages Expense e) Dividends f) Rent revenue g) Utilities Expense

Problem 4-6 Below is the Retained Earnings account for the year 2017 for Pronghorn Corp. Retained...

Problem 4-6 Below is the Retained Earnings account for the year 2017 for Pronghorn Corp. Retained earnings, January 1, 2017 $265,330 Add: Gain on sale of investments (net of tax) $48,930 Net income 92,230 Refund on litigation with government, related to the year 2014 (net of tax) 29,330 Recognition of income earned in 2016, but omitted from income statement in that year (net of tax) 33,130 203,620 468,950 Deduct: Loss on discontinued operations (net of tax) 42,730 Write-off of goodwill...

what are adjusting entries? What does “closing the books” mean? Define Retained Earnings and what is...

what are adjusting entries? What does “closing the books” mean? Define Retained Earnings and what is its relevance? What is the purpose of a “post-closing trial balance”? Define report customization and if there is a need for this.

please highlight the answer the subject is ACC111 1) The job of the retained earnings account...

please highlight the answer the subject is ACC111 1) The job of the retained earnings account is to show A) How much expense there was during a period B) How much was earned as net income in the past and not distributed as a dividend C) How much usefulness remains in the asset at the end of a period D) How much was earned during a period 2) The job of a revenue account is to show A) The amount...

At 1 July 2019, the balance in the Retained Earnings account of Melbourne Ltd was $3...

At 1 July 2019, the balance in the Retained Earnings account of Melbourne Ltd was $3 500 000. The company’s share capital at the 1 July 2019 comprises 400 000 6% preference shares issued for $2.00 per share and 1 400 000 ordinary shares fully paid at $1 per share. During the year ended 30 June 2020, the following events occurred: 1. On 1 February 2020, the directors declared and paid an interim ordinary dividend of $124 000 from retained...

Cash dividends and stock splits decrease the Retained Earnings account. true or false?

Based on the following balance sheet accounts for X Corporation, what is retained earnings? Explain if...

Based on the following balance sheet accounts for X Corporation, what is retained earnings? Explain if you can Inventory $8,000 Accounts Receivable $5,000 Cash 10,000 Copyright 6,000 Auto 4,000 Capital Stock 15,000 Machinery 7,000 Accounts Payable 9,000 Taxes Payable 3,000 Mortgage Payable 10,000

If a firm has retained earnings of $4.0 million, a common shares account of $6.0 million,...

If a firm has retained earnings of $4.0 million, a common shares account of $6.0 million, and additional paid-in capital of $12.0 million, how would these accounts change in response to a 10 percent stock dividend? Assume market value of equity is equal to book value of equity. (Enter your answers in dollars not in millions. Input all amounts as positive values. Indicate the direction of the effect by selecting "increase" , "decrease" and "no change" from the dropdown menu.)...

What is the amount of retained earnings at December 31, 2019?

Obrien Industries began 2019 with retained earnings balance of $735,000. During 2019, the firm earned $280,000 after taxes. From this amount, preferred stock holders were paid $42,000 in dividends and common stock dividends were $175,000. What is the amount of retained earnings at December 31, 2019?

Question