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Question - Kristin Edgar is the manager and sole stockholder of the K.E. Hotel. In fact, this is the first year the business has been incorporated. Until this year Kristin has been a sole proprietor, but she incorporated to avoid unlimited liability. Kristin has hired you to help her prepare her financial statements. Now that she is incorporated, Kristin must prepare a statement of retained earnings instead of a statement of owner's equity. The following is financial information from the K.E. Hotel:
Net Income for the Year 20X2 $24,700
Dividends Paid during 20X2 $13,700
Dividends Declared during 20X2 $15,000
Balance in Retained Earnings January 1, 20X20
Required - Using the information provided, prepare a statement of retained earnings for the K.E. Hotel for the year ended December 31, 20X2.
Financial Statement Analysis and Preparation
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T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .
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