Delta Alarm, Inc., began the year with $20,000 of common stock and $32,000 of retained earnings. On May 5, investors bought $12,000 of additional stock in the business. On August 22, the business purchased land valued at $80,000. The income statement for the year ended December 31, 2012, reported a net loss of $9,000. During this fiscal year, the business paid $300 each month for dividends.
1. Prepare Delta Alarm’s statement of retained earnings for the year ended December 31, 2012.
2. Did the retained earnings of the business increase or decrease during the year? What caused this change?