Question
In: Accounting
The major difference in the statement of retained earnings between a service business and a merchandising business is
The major difference in the statement of retained earnings between a service business and a merchandising business is
that the retained earnings statement of a merchandisi business shows the Cost of Goods Sold.
B) that the retained earnings statement of a merchandising business includes Dividends.
C) nothing. There are no differences between the two.
D) that the retained earnings statement of a service business includes Dividends.
Solutions
Expert Solution
The option (c) is right option.
Explanation:
Retained Earnings shows the statement of net profits after the dividends are paid to shareholders irrespective of the type of business. The difference between service and merchandise business howevers happens on the asset side and not the retained earnings side.
Hence, (c) is right option.
Hence, (c) is right option.
Umair answered 1 year agoRelated Solutions
Statement of retained earnings :
Rolt Company began 2019 with a $105,000 balance in retained earnings. During the year, the following events occurred:
1. The company earned net income of $86,000.
2. A material error in net income from a previous period was corrected. This error correction increased retained earnings by $9,590 after related income taxes of $4,110.
3. Cash dividends totaling $12,000 and stock dividends totaling $18,500 were declared.
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Statement of retained earnings
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Misclassifcations Roz Corporation's Multiple-Step income statement and retained earnings statement for the year ended December 31, 2019 as developed by its bookkeeper are shown here:
Revenue StatementDecember 31, 2019
Sales (net)
$179,000
Plus: Income from operations of discontinued Division P (net of $960 income taxes)
2,240
Less: Dividends declared ($1.50 per common share)
(7,500)
Net revenues
$173,740
Less: Selling expenses
(19,000)
Gross profit
$154,740
Less Operating expenses:
Interest expense
$4,100
Loss on sale of Division P (net of $1,200 income...
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