Below is the balance sheet of Tom Ltd. Required: construct the Retained Earnings account to calculate the dividend amount. Any additional information are given as a notes below.

Beach Ltd
Statement of financial position
As at 31 December
	2018	2019
ASSETS
Current assets
Cash	$23,000	$25,000
Marketable securities	$19,000	$15,600
Accounts receivable (net)	$95,000	$110,000
Inventory	78,000	$90,000
Total current assets	$215,000	$240,600
Non-current asset
Property, plant and equipment (net)	$465,000	$520,000
Total assets	680,000	$760,600
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$80,700	$83,600
Income taxes payable	$24,300	$28,000
Total current liabilities	$105,000	$111,600
Non-current liabilities
Notes payable	$150,000	$184,000
Total liabilities	$255,000	$295,600
Equity
Share capital ($5 each)	$180,000	$200,000
Retained earnings	$245,000	$265,000
Total equity	$425,000	$465,000
Total liabilities and equity	$680,000	$760,600

Additional information:

1. Beach Ltd shares recently sold at $28.50 per share.

2. All dividends are cash dividends.

3. All sales are credit sales.

The income statements are presented below.

Statement of financial performance
For the year ended 31 December
	2018	2019
Net sales (all on account)	$645,000	$704,000
EXPENSES
Cost of sales	$360,000	$376,000
Selling and administrative	$138,000	$145,000
Interest expense	$7,500	$9,500
Income tax expense	$41,850	$52,050
Total expenses	$547,350	$582,550
Profit	$97,650	$121,450

Answer rating: 100% (QA)

To calculate the dividend amount and construct the Retained Earnings account for Tom Ltd we need to ... View the full answer