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Prepare a statement of retained earnings

    Assignment Instructions

    Assignment ID: FG133136107

    Question – PART 1 – Tamarisk Inc. has recorded all necessary adjusting entries, except for income tax expense, at its fiscal year end, July 31, 2021. The following information has been taken from the adjusted trial balance:

    Accounts payable

    $25,500

    Interest expense

    $4,500

    Cash dividends-common

    62,000

    Notes payable

    108,000

    Common shares

    200,000

    Retained earnings (Aug. 1, 2020)

    303,200

    Cost of goods sold

    313,500

    Salaries expense

    126,000

    Dividends payable

    14,800

    Sales

    682,000

    Income tax expense

    27,500

    Supplies expense

    11,500

    Income tax payable

    2,900

    Unearned revenue

    11,600

    All accounts have normal balances and total assets equal $803,000. Tamarisk has a 20% income tax rate.

    Prepare a multiple-step income statement.

    Prepare required journal entry to adjust income tax expense.

    PART 2 – Sheridan Ltd. has a September 30 fiscal year end and a 15% income tax rate. The following information is available for its 2021 year end:

    1. Earned $490,000 of service revenue and incurred $406,500 of operating expenses. Interest expense was $3,900.

    2. On October 5, 2020, paid $50,000 of dividends that had been declared on September 25, 2020.

    3. On September 28, 2021, declared $40,000 of dividends payable on October 8, 2021.

    4. Retained earnings on September 30, 2020, were $250,000.

    5. Issued common shares for $23,500 cash on July 2, 2021.

    Prepare an income statement.

    Journalize the adjustment for income tax assuming no income tax instalments were made during the year.

    Prepare a statement of retained earnings.

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