Question

At September 1, 2017, Five-O Inc. reported retained earnings of $136,000. During the month, Five-O generated revenues of $20,000, incurred expenses of $12,000, purchased equipment for $5,000 and paid dividends of $2,000. What is the balance in retained earnings at September 30, 2017? $137,000 credit $142,000 credit $136,000 debit $8,000 credit

Answer 1

Answer:

correct answer is $142,000 credit

Explanation:

given data

retained earnings = $136,000 credit

revenues = $20,000

expenses = $12,000

purchased equipment = $5,000

paid dividends = $2,000

solution

we get here first net income that is

net income = revenues  - expenses  ...........1

net income = $20,000 - $12,000

net income = $8,000

now we get here balance in retained earnings that is

balance of retained earning = Retained Earnings + net income - dividends ..........2

balance of retained earning = $136,000 + $8,000 - $2,000

balance of retained earning = $142,000  credit

 so correct answer is $142,000 credit