Generally Accepted Accounting Principles and Subject Matter Expert
Answer : Engineers cash account increases and company balance decreases . In terms of accounting head : (DR) Salary account (L) (CR) operating expense account ( Bank) (A) …show more content…
Answer : Yes it is transaction ,where in dividend is paid to shareholders reducing company profit and distributing the same to the shareholders .
In terms of accounting entry : ????
(DR) dividend account (CR) Bank Account .
Echo Corporation is into farming tractor-manufacturing business. At the end of year 1, their retained earnings are $250, and cash is $100. In year 2, ABC makes a net loss of $30. In year 3, ABC makes a net profit of $50 and also issues dividends of $25 to its shareholders. Due to these transactions, what will be the Retained Earnings on Echo’s Balance Sheet after Year 3? What will be cash after year 3?
Retained earning :250 balance at 1st year (30) net loss Year 2 50 profit year 3 (25) dividend year 3 Total :245 $ is the retained earning after 3rd year .
RE(retained earning) are earning kept by the company and not distributed to shareholders .
RE is balance (250 + profit - loss –dividend ) Cash :100 balance at 1st year ??? (30) loss at 2 year 50 profit year