Answer:
The net adjustments to be made to retained earnings due to the closing entries would be net income of $15,000 ($25,000 - $10,000) and dividends of $2,000.
Explanation:
Retained earnings is the accumulated amount of net income left after payment of dividends to shareholders. The adjustments usually made to retained earnings relate to net income and dividends (cash or stock). While the former is usually added to retained earnings, the latter is usually deducted.
In the question, the only relevant adjustments are net income of $15,000 ($25,000 - $10,000) and dividends of $2,000; every other account relates to other balance sheet components (either assets or liabilities). Therefore, the adjusted retained earnings balance at the end of the year would be: $20,000 + $15,000 - $2,000 = $33,000 (adjusted retained earnings).