retained earning — OpenTuition Forums

Mmary11y ago

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 20x1 1,200,000 share premium 1 jan20x1 800,000 retained earnings 1 jan 20x1 2,292,000 new shares issued 500,000 profits earned to 31 dec 20x1 425,000 dividends paid 31 Aug 20x1 190,000 transfer to general reserve 31 dec 20x1 42,000 what is the figure for retained earnings at 31 December 20x1? thanking you for any help in advance.

John MoffatTutor11y ago#1

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

Mmary11y ago#2

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.

John MoffatTutor11y ago#3

I hope you find the lectures useful (although we are not here to give answers to mock exams :-) )

Sign into reply to this topic.