Cash Dividends And Retained Earnings

Question: Retained Earnings and Dividends?

During 2004, Cameron Corporation had Revenues of $357,000 and Expenses of $423,000 and declared cash dividends of $25,000. The retained earnings on January 1, 2004 was $268,000.
1. Complete closing entries on December 31, 2004 (no dates or explanations required)
2. Calculate the balance in Retained Earnings on December 31, 2004.

And I have:
DEBIT
Retained Earnings268,000
CREDIT
Dividends Payable25,000
“Declared a Cash Dividend”
and: Revenues – Expenses = Net Income —- 357,000 – 424,000 = (66,000)

Im doing something wrong – massively – help?

Answer: The company has a net loss of $66k. So, the retained earning at the end of the year before dividend declaration becomes 202k (268k – 66k).

The closing entries are:

Debit R.E. 66, credit net income 66 to close income and expenses for the year. Debit R.E. $25k and Credit Dividend Payable for $25k for the dividend declaration.

The balance in R.E. = $202k – $25k = $177k.

I usually don’t answer questions on accounting homework because students should work out the problems themselves in order for the study to be meaningful. It’s not good to have answers spoon fed for instant gratification because when time comes for exams, the student won’t be able to answer the questions, no Yahoo Answerers. But it seems you had already worked it out and still having the problems so I took time to work it out for you. So, keep studying and get a good grade in accounting.

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