Several Transactions Occurred for Shadow Dreams Corporation During 2017 $\underline{\quad\quad}$ A Tomado Completely Destroyed the Company's Warehouse on March 1

question 30

Essay

Several transactions occurred for Shadow Dreams Corporation during 2017.Indicate the effect each item has directly on retained earnings by writing the amount in the space provided.Place a + (plus sign)in front of the amount if the item increases retained earnings,or ( )parentheses around the amount if the item decreases retained earnings.Place an X in the blank for items that have no direct effect on retained earnings.(Items that affect the income statement do not directly affect retained earnings. )
A) $\underline{\quad\quad}$ A tomado completely destroyed the company's warehouse on March 1 . The original cost was $\$ 300,000$ , and the book value was $\$ 160,000$ on that date. The company had no insurance on the warehouse.

B) $\underline{\quad\quad}$ Shadow Dreams earned net income in the amount of $\$ 450,000$ for the year ending December 31, 2017.

C) $\underline{\quad\quad}$ Shadow Dreams declared and paid $\$ 320,000$ of cash dividends to common and preferred stockholders during 2017 .

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Definitions:

Proportion

A fraction or percentage that indicates the part of a whole represented by a certain count or quantity.

Student T Distribution

A probability distribution used in statistical inference for datasets with small sample sizes and unknown population standard deviations.

Variance

A measure of the dispersion of a set of data points around their mean; the average of the squared differences from the Mean.

Degrees of Freedom

The number of independent values or quantities that can freely vary in the analysis of statistical calculations without violating any constraints.