Question

Data for Anita Baker Company are presented in E23-18.

Instructions

Prepare entries in journal form for all adjustments that should be made on a worksheet for a statement of cash flows.

Short answer

The journal entries are recorded in Step 2.

Step-by-step solution

Step1:Definition of retained earnings

The retained earnings are defined as the accumulation of part of profits which are left after paying the dividends to the shareholders of the company.

Step 2:Preparation statement of cash flows

Journal
Date	Particulars	Debit ($)	Credit ($)
	Retained Earnings	15,000
	Financing- Cash Dividends		15,000
	(Payment of dividends)
	Operating – Net Income	40,000
	Retained Earnings		40,000
	(Net Income recorded)
	Operating - Depreciation Expense	16,800
	Accumulated Depreciation - Equipment		16,800
	(Depreciation expense recorded)
	Equipment	110,000
	Investing – Purchase of equipment		62,000
	Investing – Construction of equipment		48,000
	(Equipment purchased and constructed)
	Equipment	21,000
	Investing – Extraordinary repairs to equipment		21,000
	(Major repairs recorded)
	Operating – Loss on sale of equipment	5,800
	Accumulated depreciation - Equipment	25,200
	Investing – sales of equipment	25,000
	Equipment		56,000
	(Sale of equipment recorded)