ACCA FA · Chapter 11 · Question 12 of 12
A company's retained earnings at the start of the year were $210,000. During the year it made a profit of $64,000 and paid dividends of $18,000. Its property was revalued upwards by $30,000, and a transfer of $2,000 was made from the revaluation surplus to retained earnings for the excess depreciation. What are the retained earnings at the end of the year?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) $258,000
Explanation
Retained earnings = $210,000 + $64,000 - $18,000 + $2,000 = $258,000. The $30,000 revaluation gain is credited to the revaluation surplus, not retained earnings. Including it gives $288,000, and omitting the transfer gives $256,000.
More Preparing financial statements, events after the reporting period and incomplete records MCQs
- Q2At the year end, a company has a bank loan of $120,000 which is repayable in equal annual instalments of $20,000, the next of which is due…
- Q3A company estimates its income tax for the current year at $46,000. The tax liability for the previous year was estimated at $38,000, but…
- Q4Under IAS 10 Events after the Reporting Period, which of the following events after the year end is an ADJUSTING event?
- Q5How should a material non-adjusting event after the reporting period be treated in the financial statements?
- Q6After the reporting date but before the financial statements are authorised for issue, the directors declare an ordinary dividend. How…