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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