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1 July, 11:10

Sammy's Pizza opened on January 1, 2018. Sammy's reported the following for cash revenues and cash expenses for the years 2018 to 2020: Cash Revenues Cash Expenses 2018 $ 20,000 $ 11,000 2019 $ 30,000 $ 14,000 2020 $ 40,000 $ 22,000 Required What would Sammy's Pizza report for net income and retained earnings for the years 2018, 2019, and 2020? Assume that Sammy's Pizza paid a $5,000 dividend to stockholders in 2019. What would Sammy's Pizza report for net income and retained earnings for 2019 and 2020?

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  1. 1 July, 11:16
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    2018 9,000 net income RE 9,000

    2019 16,000 income RE 20,000

    2020 18,000 income RE 38,000

    Explanation:

    we will do revenues less expenses to get the net income under cash basis:

    year ended December 31th, 2018

    revenue $ 20,000 - expense $ 11,000 = $9,000 income

    Thus, 9,000 RE

    year ended December 31th, 2019

    revenue for 30,000 - expense 14,000 = 16,000 income

    beginning 9,000

    income 16,000

    dividends (5,000)

    endining 20,000

    year ended December 31th, 2020

    $ 40,000 - $ 22,000 = $ 18,000

    20,000 beginning + 18,000 income = 38,000
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