Question

Exercise 15-16 The following information has been taken from the ledger accounts of Cheyenne Corporation.

Total income since incorporation $328,000

Total cash dividends paid 56,000

Total value of stock dividends distributed 29,000

Gains on treasury stock transactions 16,000

Unamortized discount on bonds payable 29,000

Determine the current balance of retained earnings.

Current balance of retained earnings $?

Answer 1

Current balance of retained earnings

= Income since incorporation - Cash dividends paid - Stock dividends distributed

= 328,000 - 56,000 - 29,000

= 243,000

Comment if you face any issues

Answer 2

To determine the current balance of retained earnings, we need to consider the components that affect the retained earnings account.

The retained earnings formula is: Current Retained Earnings = Total Income - Total Cash Dividends Paid - Total Value of Stock Dividends Distributed + Gains on Treasury Stock Transactions - Unamortized Discount on Bonds Payable

Given the following information: Total Income since incorporation = $328,000 Total Cash Dividends Paid = $56,000 Total Value of Stock Dividends Distributed = $29,000 Gains on Treasury Stock Transactions = $16,000 Unamortized Discount on Bonds Payable = $29,000

Let's calculate the current balance of retained earnings:

Current Retained Earnings = $328,000 - $56,000 - $29,000 + $16,000 - $29,000

Current Retained Earnings = $230,000

So, the current balance of retained earnings is $230,000.

Answer 3

To determine the current balance of retained earnings, we need to calculate the net income and then adjust it for dividends and stock dividends.

Net Income = Total Income - Total Cash Dividends Paid - Total Value of Stock Dividends Distributed + Gains on Treasury Stock Transactions

Net Income = $328,000 - $56,000 - $29,000 + $16,000 Net Income = $259,000

Next, we need to adjust the net income for the unamortized discount on bonds payable.

Adjusted Net Income = Net Income - Unamortized Discount on Bonds Payable

Adjusted Net Income = $259,000 - $29,000 Adjusted Net Income = $230,000

Finally, we can calculate the current balance of retained earnings by subtracting all previous dividends from the adjusted net income.

Current Balance of Retained Earnings = Adjusted Net Income - Total Cash Dividends Paid - Total Value of Stock Dividends Distributed

Current Balance of Retained Earnings = $230,000 - $56,000 - $29,000 Current Balance of Retained Earnings = $145,000

The current balance of retained earnings is $145,000.