Didsbury Digital Ltd. has a September 30 fiscal year end and a 15% income tax rate. The
Question:
Didsbury Digital Ltd. has a September 30 fiscal year end and a 15% income tax rate. The following information is available for its 2014 year end:
1. Earned $529,000 service revenue and incurred $442,000 operating expenses. Interest expense was $2,500.
2. Recorded and remitted $10,000 of income tax (related to the 2014 fiscal year) during the year.
3. On October 5, 2013, paid $50,000 of dividends that had been declared on September 25, 2013.
4. On September 28, 2014, declared $40,000 of dividends payable on October 8, 2014.
5. Retained earnings on September 30, 2013, were $237,500.
6. Issued common shares for $25,000 cash on July 2, 2014.
Instructions
(a) Prepare an income statement and record the adjustment to income tax.
(b) Prepare a statement of retained earnings.
Step by Step Answer:
Accounting Principles Part 3
ISBN: 978-1118306802
6th Canadian edition Volume 1
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Kinnear, Joan E. Barlow