Question

Allen Shonton recently opened his own accounting firm on April 1, which he operates as a corporation. The name of the new entity is Allen Shonton, CPA. Shonton experienced the following events during the organizing phase of the new business and its first month of operations in 2018: Apr. 5 Shonton deposited \(75,000 in a new business bank account titled Allen Shonton, CPA. The business issued common stock to Shonton. 6 Paid \)300 cash for letterhead stationery for new office. 7 Purchased office furniture for the office on account, \(9,500. 10 Consulted with tax client and received \)4,000 for services rendered. 11 Paid utilities, \(190. 12 Finished tax hearings on behalf of a client and submitted a bill for accounting services, \)20,000. 18 Paid office rent, \(750. 25 Received amount due from client that was billed on April 12. 27 Paid full amount of accounts payable created on April 7. 30 Cash dividends of \)3,500 were paid to stockholders. Requirements: Prepare the following financial statements: b. Statement of retained earnings.

Short answer

The retained earnings of the company as on April 30, 2018 is $19,560.

Step-by-step solution

Explanation on the statement of retained earnings

Statement of retained earnings records the change in the balance of retained earnings.

Explanation on retained earnings

Retained earnings represents the summation of profits of the prior or previous years.

Statement of retained earnings is shown as follows:

Allen Shonton, CPA. Shonton
Statement of Retained Earnings
Month Ended April 30, 2018
Retained Earnings, April 1, 2018	$0
Net income for the year	23,060
	23,060
Dividends	(3,500)
Retained Earnings, April 30, 2018	$19,560