Question

The following account balances were taken from the adjusted trial balance of Kendall Company Revenues Operating Expenses Dividends Retained Earnings $22,700 15,100 4,600 17,100 What is the Retained Earnings account balance that will be included on the post-closing trial balance? Packard Company engaged in the following transactions during Year 1, its first year of operations:(Assume all transactions are cash transactions.) 1) Acquired $1,450 cash from the issue of common stock. 2) Borrowed $920 from a bank. 3) Earned $1,100 of revenues. 4) Paid expenses of $350. 5) Paid a $150 dividend. During Year 2, Packard engaged in the following transactions: (Assume all transactions are cash transactions) 1) Issued an additional $825 of common stock 2) Repaid $570 of its debt to the bank. 3) Earned revenues of $1,250. 4) Incurred expenses of $560 5) Paid dividends of $200 What was the balance of Packard's Retained Earnings account before closing In Year 1?

Answer 1

Answer:

kendall company retained earning = $20100.

Retained earning (end) = $600.

Explanation:

                                        Kendall company

Retained earning after post closing= retained earning before closing + Net income - Less dividend.

- Net income= Revenues - operating expense=22700-15100= $ 7600.

-Retained earning after post closing = 17100+7600-4600= $20100.

                                       Packard company

year 1

1. Dr Cash 1450

        Cr common stock   1450

2.Dr Cash    920

           Loan payable   920.

3. Dr Unearned revenue  1100

         Cr Revenue earned        1100.

4. Dr  Expense   350

       Cr     Cash        350

5. Dr Dividend payable   150

              Cr Cash                    150.

As we know that:

Retained earning(end) = retained earning (open)+net income - dividend

                           = 0+ [1100-350]-150

                           = 750-150

                           = $600.