Financial information related to Udder Products Company for the month ended April 30, 2016, is as follows:
Net income for April $166,000
Cash dividends paid during April 25,000
Retained earnings, April 1, 2016 384,500
a. Prepare a retained earnings statement for the month ended April 30, 2016.
b. Why is the retained earnings statement prepared before the April 30, 2016, balance sheet?
Answer:
a. b. The retained earnings statement is prepared before the April 30, 2016, balance sheet because retained earnings as of April 30, 2016, is needed for the balance sheet.
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