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Problem 2: Gondola Company Showed The Following Charges and Credits To Retained Earnings For 2021

The Gondola Company had the following activity impact its retained earnings in 2021: an opening balance of $2.6 million, net income of $3 million, stock dividends of $700,000, and appropriations for treasury shares of $1 million. Other impacts included prior period adjustments, losses and gains from various activities. The closing retained earnings balance for 2021 was $3.5 million.

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1K views

Problem 2: Gondola Company Showed The Following Charges and Credits To Retained Earnings For 2021

The Gondola Company had the following activity impact its retained earnings in 2021: an opening balance of $2.6 million, net income of $3 million, stock dividends of $700,000, and appropriations for treasury shares of $1 million. Other impacts included prior period adjustments, losses and gains from various activities. The closing retained earnings balance for 2021 was $3.5 million.

Uploaded by

Katrina Dela Cruz
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Problem 2: Gondola Company showed the following charges and credits to retained earnings for 2021:

Balance – January 1 2,600,000


Loss from fire 50,000
Goodwill impairment 250,000
Share dividend 700,000
Loss on sale of equipment 200,000
Compensation of prior period not accrued 500,000
Loss on retirement of preference share at more than issue price 350,000
Share premium 600,000
Gain on early retirement of bonds 100,000
Gain on life insurance settlement 450,000
Correction of prior period error 400,000
Net income for the year 3,000,000
Appropriated for treasury shares during the year 1,000,000
Required: Prepare a statement of retained earnings for 2021.
Gondola Company
Statement of Retained Earnings
For the Period Ended xx 2021

Retained earnings, 2,600,000.0


Jan. 1 0
Correction
of Error
Compensation not -
accrued 500,000.00
Correction error -
Credit 400,000.00

Corrected beginning 2,500,000.0


Balance 0

3,050,000.0
Net Income 0
Loss on retirement of -
preference share 350,000.00
Stock -
dividends 700,000.00
-
Appropriation for 1,000,000.0
Treasury 0

Retained Earnings, 3,500,000.0


Dec. 31 0

Net Income,
3,000,000.0
unadjusted 0
Items included in retained -
earnings 50,000.00
Loss from -
Fire 250,000.00
Goodwill -
Impairment 200,000.00
Loss on sale of
equipment 100,000.00
Gain on early
retirement 450,000.00

Gain on settlement of 3,050,000.0


Insurance 0
Net Income,
adjusted

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