Question

The trial balance of Barger Company at the end of the accounting period, immediately prior to recording closing entries, showed the following: Debit credit Cash 16,000 Land 30,000 Notes payable 19,400 Common stock 9,000 Retained earnings 14,000 Service revenue 43,000 Expenses 38,400 Dividends 1,000 Total $ 85,400 $ 85,400 What will the balance of the retained earnings account be after the closing entries are recorded

Answer 1

Answer:

The balance of the retained earnings account after the closing entries are recorded will be $17,600

Explanation:

Net income of Barger Company = Service revenue - Expenses = $43,000 - $38,400 = $4,600

The balance of the retained earnings account after the closing entries are recorded = The balance of the retained earnings account before the closing entries are recorded + Net income - Dividends  = $14,000 + $4,600 - $1,000 = $17,600