Prepare a Statement of Retained Earnings in Proper Form for Gray

question 118

Essay

Prepare a statement of retained earnings in proper form for Gray Corporation for the year ended December 31,20XX,from the following:
$$\begin{array} { l r } \text { Retained Earnings, January } 1,20 \times\times & \$ 7,700 \\\text { Dividends declared during the year } & 1,400 \\\text { Net income for the year } & 10,000 \\\text { Correction of prior year error, Sales overstated } & 3,000\end{array}$$

---

Definitions:

Compounded

The process where the value of an investment increases because the earnings on an investment, both capital and interest, earn interest as time passes.

Future Value

The value of an investment at a specific date in the future, calculated by applying expected rates of return.

Ordinary Annuity

A series of equal payments or receipts that occur at the end of each period for a fixed duration.

Compounded Annually

Describes the method by which the interest earned on an investment is calculated and added to the principal balance once per year, leading to an increase in the amount of future interest.