On January 1, 2014, Mather Corporation Had Retained Earnings of $625,000

question 138

Essay

On January 1, 2014, Mather Corporation had Retained Earnings of $625,000. During the year, Mather had the following selected transactions:
1. Declared stock dividends of $40,000
2. Declared cash dividends of $50,000
3. A 2 for 1 stock split involving the issue of 200,000 shares of $5 par value common stock for 100,000 shares of $10 par value common stock
4. Suffered a net loss of $80,000
Instructions
Prepare a Retained Earnings Statement for the year.

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Definitions:

Constant Returns to Scale

The situation where an increase in all inputs by a certain factor leads to an increase in output by the same factor, showing linear scalability in production.

Diseconomies of Scale

The phenomenon where production costs per unit increase as a firm's output expands, often due to inefficiencies that arise from becoming too large.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Average Total Cost

The total cost of production divided by the quantity of output produced; it includes all variable and fixed costs.