Question

Revise the given year end information in your spreadsheet with the following values, and then answer the questions below: Dividends $ 2,700 Year 1 Year 2 Year 3 Year 4 Revenue $17,800 7,800 47,800 92,800 Expenses $ 6,480 11,400 26,400 41,400 5,700 10,700 Required: 1. Complete the table below based on your spreadsheet results: (Negative amount should be indicated by a minus sign.) Year Net Income Retained Earnings 1 2 4 2. Assume revenues increase 20% in both Years 1 and 4, what would the revised balances be? (Negative amount should be indicated by a minus sign.) Year Net Income Retained Earnings 2 3 4

Answer 1

Answer

Part 1

Year	Net Income ( From WN1)	Retained earnings(From WN 2)
1	10600	7900
2	-3600	4300
3	21400	20000
4	51400	60700
WN1
Year	Revenue(a)	Expenses(b)	Net Income (a-b)
1	17000	6400	10600
2	7800	11400	-3600
3	47800	26400	21400
4	92800	41400	51400
WN 2
Opening Retained Earnings(a)	Net Income (b)	Dividend©	Closing Retained earnings(a+b-c)
0	10600	2700	7900
7900	-3600	0	4300
4300	21400	5700	20000
20000	51400	10700	60700

Part 2

Now if Increase revenue in Year 1 By 20% then New Revenue will be $17000 x 120 %= $20400

and year 4 Revenue = $92800 x 120%=$111,360

Year	Net Income (WN1)	Retained earnings(wn 2)
1	14000	11300
2	-3600	7700
3	21400	23400
4	69960	82660
WN1
Year	Revenue(a)	Expenses(b)	Net Income (a-b)
1	20400	6400	14000
2	7800	11400	-3600
3	47800	26400	21400
4	111360	41400	69960
WN2
Opening Retained Earnings(a)	Net Income (b)	Dividend©	Closing Retained earnings(a+b-c)
0	14000	2700	11300
11300	-3600	0	7700
7700	21400	5700	23400
23400	69960	10700	82660

Note :-1) Next year Opening Reatined earnimgs is same as Closing Reatined earning of last year

2)Closing retained earnings=Opening Retained Earnings + Net Income (current year)- Dividend

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