Question

The following information was drawn from the accounting records of Wyckoff Company as of December 31, 2016, before the temporary accounts had been closed. The Cash balance was $3,600, and Notes Payable amounted to $4,000. The company had revenues of $7,500 and expenses of $3,400. The company’s Land account had a $8,000 balance. Dividends amounted to $1,000. There was $2,000 of common stock issued.Assuming that Wyckoff’s beginning balance (as of January 1, 2016) in the Retained Earnings account was $2,500, determine its balance after the temporary accounts were closed at the end of 2016.What amount of net income would Wyckoff Company report on its 2016 income statement?

Answer 1

Answer:

This question has two requirements the answer of each requirement is given below.

Determine retain earning balance after the temporary accounts were closed at the end of 2016

Retain earning opening balance           $ 2,500

Addition during the year                        $ 4,100

(Sales revenue 7,500- expenses 3,400)

Dividend paid                                          ($ 1000)

Retain earning closing balance            $ 5,600

Net income would Wyckoff Company report on its 2016 income statement

Net income = Revenue - expenses

Net income = $ 7,500 - $ 3,400

Net income = $ 4,100