The Income Statement for Hudson Company Reported Net Income of $345,000

question 20

Essay

The income statement for Hudson Company reported net income of $345,000 for the year ended December 31, 2012 before considering the following:
During the year the company purchased trading securities. At year end, the fair value of the investment portfolio was $23,000 less than cost.
The balance of retained earnings was $823,000 on December 31, 2011. Hudson Company paid $43,000 in cash dividends in 2012. Calculate the balance of retained earnings on December 31, 2012.

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Definitions:

Voidable

Describes a legal transaction or agreement that may be nullified or rescinded by one or more parties.

Released

The action of freeing someone or something from a constraint, obligation, or legal liability.

Obligations

Duties or commitments that an individual or entity is legally or morally bound to fulfill.

Executory Contract

An agreement between parties that has not yet been fully performed or completed by one or more parties.