Bindra Company reported retained earnings at December 31, 2013, of $341,090. Bin

Question

Bindra Company reported retained earnings at December 31, 2013, of $341,090. Bindra had 199,000 shares of common stock outstanding throughout 2014. The following transactions occurred during 2014. 1. An error was discovered: in 2012, depreciation expense was recorded at $73,500, but the correct amount was $52,650. 2. A cash dividend of $0.65 per share was declared and paid. 3. A 6% stock dividend was declared and distributed when the market price per share was $16 per share. 4. Net income was $288,900. Prepare a retained earnings statement for 2014. (List items that increase retained earnings first.)

Explanation / Answer

A 6% stock dividend (6%*199000 = 11,940 share) was declared and distributed when the market price per share was $16 per share So Retained Earnings (11940 shares X $16) Dr $191,040 Corrected RE Stt: Retained earnings at December 31,2013 $341,090 Add : Diff of dep exp (73500-52650) $20,850 Add: Net income was $288,900 Less : Cash dividends declared & Paid ((199000+11,940)*$0.65) $137,111 Less : Stock Dividend $191,040 -------------------------------------------------- Retaind Earnings on 31 Dec 2014 $322,689

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