Prepare a Statement of Retained Earnings for the Year Ended

question 29

Essay

Prepare a Statement of Retained Earnings for the year ended June 30, 2014.
Chedacorn was incorporated on July 1, 2012 by 10 shareholders who each invested $100,000 in cash in exchange for common shares. Chedacorn's year end is June 30th. In its first year of business Chedacorn had a net income of $243,750. For its years ended June 30, 2013 and 2014, its second and third years of operation, Chedacorn reported net income of $472,500 and $560,000 respectively. In its first year Chedacorn did not pay any dividends, but in fiscal 2013 it paid $62,500 in dividends and in 2014 it paid $100,000 in dividends.

---

Definitions:

Lump Sum Bonus

Merit pay that is awarded in a single payment and not built into base pay.

Scanlon Plan

A type of gainsharing program that incentivizes employees to increase productivity through cost-saving measures, sharing the resulting financial gains.

Base Pay

The initial rate of compensation that an employee receives in exchange for services, excluding extra payments like bonuses or overtime.

Merit Pay

A compensation approach that provides financial rewards to employees based on their performance, as opposed to their time worked or position.