Answer:
$787,000.
Explanation:
Skysong, Inc. generated a profit of $248,000 (633,000 - 385,000) during the year 2022. This amount has a credit balance in income statement, closing it would require a debit to it and a credit entry to match the debit is made to Retained Earnings account which is an item of Statement of Owners' Equity. Statement of Owners' Equity is a report that represents the Equity section of balance and accounts for any changes in the owners' equity during a period. The items included in this statement are Capital, Paid-up Capital, Retained Earnings, and Drawings. To calculate the ending balance of Skysong's retained earnings, we have to prepare a statement of owners' equity.
Statement of Owners' Equity
<u>Capital</u> <u>Retained Earnings</u>
Opening Balance - $670,000
Additional Stock $1,005,000
Profit for the Year 248,000
Dividends Paid (131,000)
Closing Balance $1,005,000 787,000
⇒ Skysong's retained earnings will be reported at $787,000 at the end of 2022.
