Question

Love Company’s accounting records show an after-closing balance of $42,100 in its Retained Earnings account on December 31, 2018. During the 2018 accounting cycle, Love earned $19,400 of revenue, incurred $9,800 of expense, and paid $500 of dividends. Revenues and expenses were recognized evenly throughout the accounting period. Required Determine the balance in the Retained Earnings account as of January 1, 2019. Determine the balance in the temporary accounts as of January 1, 2018. Determine the after-closing balance in the Retained Earnings account as of December 31, 2017. Determine the balance in the Retained Earnings account as of June 30, 2018.

Answer 1

Answer and Explanation:

• Closing Balance (Retained earning ) of 31 Dec 2018 is called Opening Balance of 1 Jan 2019 , i.e. $42,100

• There is no particular information provide for 1 Jan 2018 .So, assume there is Zero balance of retained Earning

• Calculation of retained earning of 31 Dec 2017

Retained earning                             $42,100

Less: revenue during the year        $19,400

Add: Expenses During the year      $9,800

Add : Dividend                                  $500

Retained earning on 31 Dec 2017 $33,000

• Retained earning is a temporary account So, $33,000 is balance of Retained earning At 30 June 2018.