Question

The following trial balance of JB Company at December 31, year five, has been adjusted except for income taxes. The income tax rate is 30%.DR CRAccounts receivable, net 725,000Accounts payable 250,000Accumulated depreciation 125,000Cash 185,000Contributed capital 650,000Expenses 3,750,000Goodwill 140,000Prepaid taxes 225,000Property, plant and equipment 850,000Retained earnings, 1/1/Yr. 5 350,000Revenues 4,500,0005,875,000 5,875,000During year five, estimated tax payments of $225,000 were paid and debited to prepaid taxes. There were no differences between financial statement and taxable income for year five.Included in accounts receivable is $400,000 due from a loyal customer. Special terms were granted to this customer to make payments of $100,000 semi-annually every March 1 and September 1.In JB Company's December 31, year five Balance Sheet, what amount should be reported as total retained earnings?A. 225,000B. 525,000C. 750,000D. Some other amount.

Answer 1

Answer choices b and c could possibly be correct