Hyperchip Limited is a private corporation reporting under ASPE. At December 31, 2014, its general ledger contained the following summary data:

Cost of goods sold............................$ 950,000

Net sales........................................1,425,000

Operating expenses..............................270,000

Other expenses....................................30,000

Other revenues....................................45,000

Retained earnings, December 31, 2013....1,150,000

Additional information:

1. In 2014, common share dividends of $80,000 were declared on June 26 and December 26. The dividends were paid on July 9, 2014, and January 9, 2015, respectively.

2. The company's income tax rate is 20%.

Instructions

(a) Record the dividend transactions in 2014.

(b) Prepare a multiple-step income statement for 2014.

Taking It Further

Compare a statement of retained earnings with a statement of owner's equity.