Zurich Limited is a private corporation reporting under ASPE. At December 31, 2021, its general ledger contained

Question:

Zurich Limited is a private corporation reporting under ASPE. At December 31, 2021, its general ledger contained the following summary data:

Cost of goods sold .......................... $1,225,000
Interest expense .................................... 35,000
Interest revenue .................................... 12,500
Operating expenses ............................ 210,000
Retained earnings, January 1 ............. 550,000
Sales ................................................... 1,650,000

Additional information:

1. In 2021, common share dividends of $25,000 were declared on June 30 and December 31. The dividends were paid on July 8, 2021, and January 8, 2022, respectively.

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

Instructions

a. Record the dividend transactions in 2021.

b. Determine income tax expense and prepare a multiple-step income statement for 2021.

c. Prepare a statement of retained earnings for 2021.

Taking It Further

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

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...

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