A summary of the operations of Stellenbach Company for the year ended May 31, 2000, is shown
Question:
A summary of the operations of Stellenbach Company for the year ended May 31, 2000, is shown below. Advertising expense...... $ 2,760 Supplies expense. 37,820 Rent expense 1,500 Salaries expense 18,150 Miscellaneous expense. 4,170 Dividends. 12,400 Retained earnings (6/1/99). 156,540 Income taxes..... 21,180 Consulting fees (revenues)... 115,100 Administrative expense 7,250 Required: 1. Determine the net income for the year by preparing an income statement. (There are 2,000 shares of stock outstanding.) 2. Prepare a statement of retained earnings for the year ended May 31, 2000. 3. Prepare a statement of retained earnings assuming that Stellenbach had a net loss for the year of $25,000. 4. Interpretive Question: Assuming a loss as in (3), is it a good idea for Stellenbach to still pay its shareholders dividends?
Step by Step Answer:
Survey Of Accounting
ISBN: 9780538846172
1st Edition
Authors: James D. Stice, W. Steve Albrecht, Earl Kay Stice, K. Fred Skousen