Chapter 7
Corporations: The Financial Statements
354
Prepare a statement of retained earnings for the month ended September 30, 2016.
AP-5B (
3
4
)
Kensington Corporation has a December 31 year-end. Retained earnings as at December 31,
2014 had a debit balance of $15,450. During the 2015 fiscal year net income was $91,550 and
dividends of $34,500 were declared and paid. During the 2016 fiscal year Kensington had a
net income of $32,100 and dividends of $28,000 were declared and paid. An audit revealed
that the 2015 net income was understated by a net value of $5,200. A new engine was
recorded as an expense when it should have been recorded as an asset.
Required
a) Complete Kensington Corporation’s statement of retained earnings for 2015.
b) Complete Kensington Corporation’s statement of retained earnings for 2016.
