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Hello Sir,
this question has me stuck as my book does not give any clear examples of how to work this out, I would appreciate a detailed example of how to work this out. My question is:-
The following has been extracted from the accounting records of a company at 31 Dec 20X1:-
$
Share capital 1 jan 20×1 1,200,000
share premium 1 jan20x1 800,000
retained earnings 1 jan 20×1 2,292,000
new shares issued 500,000
profits earned to 31 dec 20×1 425,000
dividends paid 31 Aug 20×1 190,000
transfer to general reserve 31 dec 20×1 42,000what is the figure for retained earnings at 31 December 20×1?
thanking you for any help in advance.
I am surprised that your book does not give answers to their examples!
The retained earnings will increase due to the profit, it will decrease due to the dividends paid, and will decrease due to the transfer to general reserve.
So 2292000 + 425000 – 190000 – 42000 = 2485000
Hello Mr Moffat
thanks again for your explanation, i should of been clearer, it is a mock exam i am doing, there are no answers, but the study book (which does have answers) does not have any questions in this format for me to revise upon and therefore this question in the mock is quite new and i was unable to work it out.
I guess i will benefit from the lectures- will be watching them today.thank you.
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