Question

The 31 December 20X2 year- end trial balance for Dynamics Ltd., a private company, showed the following account balances:
Dr./( Cr.)
Retained earnings, 31 December 20X1 ............ $(7,800,000)
Sales revenue ............ ........... (8,400,000)
Dividend income from investments............... (60,000)
Cost of sales........................ 4,500,000
Impairment on discontinued plant assets, held- for- sale ( before tax) ... 700,000
General, selling, and administrative expenses............ 1,800,000
Interest expense ...................... 95,000
Reduction in prior years’ earnings due to change in accounting
policy, cumulative to 31 December 20X1 ( before tax) ......... 310,000
Dividends declared, to be paid 15 January 20X3.......... 600,000
Loss due to bankruptcy of major client.............. 135,000
The company pays income tax at a rate of 20%.

Required:
Prepare an income statement and a statement of retained earnings for the year ended 31 December 20X2



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  • CreatedFebruary 17, 2015
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