On March 1, the Amount of Retained Earnings in Richard's

question 210

Essay

On March 1, the amount of retained earnings in Richard's Catering Company was $150,000. During March, stockholders were paid $31,000 in dividends from the business. The amounts of the various assets, liabilities, revenues, and expenses are as follows: $$\begin{array} { l l } \text { Accounts payable } & \$ 10,250 \\\text { Accounts receivable } & 45,950 \\\text { Cash } & 23,840 \\\text { Fees earned } & 64,950 \\\text { Insurance expense } & 1,275 \\\text { Land } & 85,400 \\\text { Miscellaneous expense } & 1,210 \\\text { Prepaid insurance } & 3,000 \\\text { Rent expense } & 9,000 \\\text { Salary expense } & 20,300 \\\text { Supplies } & 900 \\\text { Supplies expense } & 525 \\\text { Utilities expense } & 2,800\end{array}$$ Present, in good form, a) an income statement for March, b) a statement of retained earnings for March, and c) a balance sheet as of March 31.

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Definitions:

Asset-specific Risk

The risk associated with an investment in a specific asset, which can result from factors unique to that asset, independent of the market.

Portfolio Diversification

Portfolio diversification is an investment strategy that aims to reduce risk by allocating investments among various financial instruments, industries, and other categories.

Security Market Line

A line that represents the relationship between the expected return of a security and its systematic risk, illustrating the risk-return trade-off in the capital asset pricing model (CAPM).