On January 1, 2020, Wade Corp. had retained earnings of $558,000. During 2020, Wade reported the...

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On January 1, 2020, Wade Corp. had retained earnings of $558,000. During 2020, Wade reported the...

On January 1, 2020, Wade Corp. had retained earnings of $558,000. During 2020, Wade reported the following information:

1.	Income from continuing operations: $1,210,000.
2.	Wade increased its percentage of uncollectible accounts receivable from 5% in 2019 to 10% in 2020. The new percentage was used in calculating the current year’s bad debt expense.
3.	Wade discontinued operations of one of its subsidiaries at a loss of $190,000 before taxes. The disposal met the criteria for discontinued operations.
4.	An audit discovered that amortization of intangible assets was understated by $40,000 in 2019.
5.	Wade’s income tax rate is 20% for both years.
6.	Wade declared stock dividends of $48,000.

Instructions: Prepare a statement of retained earnings.

business accounting

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Answer 1

Answer #1

Statement of Retained Earnings
Particulars	Amount
Income from Continuing Operations	$ 1,210,000
Less:
Loss from Subsidiaries	$ 190,000
Amortization of Intangibles Assets	$ 40,000
Net Income	$ 980,000
Income Tax @ 20%	$ 196,000
Income After Tax	$ 784,000
Less: Dividend Declared	$ 48,000
Income from Continuing Operations to be added to Retained Earnings	$ 736,000
Add: Opening Ratined Earnings	$ 558,000
Retained Earnings 31 Dec 2020	$ 1,294,000

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Answer 2

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