Yaya Blossom’s Inc. has a March 31, 2014 fiscal year end and a 35% income tax...
Yaya Blossom’s Inc. has a March 31, 2014 fiscal year end and a 35% income tax rate. The following information is available for its 2014 year end:
1. Performed $880,000 service revenue and paid $325,000 in salaries. Interest expense was $12,600.
2. Paid dividends in December 2013 of $14,000 that had been declared in November 2013.
3. On March 10, 2014 declared dividends of $19,000 payable April 30, 2014.
4. Recorded and remitted taxes of $140,000 (related to 2014 fiscal year) during the year.
5. Issued common shares for $15,000 on January 31, 2014.
6. Retained earnings balance on April 1, 2013 is $67,000.
Instructions
a. Prepare an income statement and record the adjustment to income tax.
b. Prepare a statement of retained earnings.
Homework Answers
| a] | INCOME STATEMENT | ||
| Service revenue | $ 8,80,000 | ||
| Expenses: | |||
| Salaries | $ 3,25,000 | ||
| Interest expense | $ 12,600 | ||
| Total expenses | $ 3,37,600 | ||
| Income before taxes | $ 5,42,400 | ||
| Taxes | $ 1,40,000 | ||
| Net income | $ 4,02,400 | ||
| b] | STATEMENT OF RETAINED EARNINGS | ||
| Balance, April 1, 2013 | $ 67,000 | ||
| Add: Net income for the year | $ 4,02,400 | ||
| Less: Dividends [14000+19000] | $ -33,000 | ||
| Net addition during the year | $ 3,69,400 | ||
| Balance, March 31, 2014 | $ 4,36,400 | ||
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