Question

The following is the adjusted trial balance for Baker Services. Accounts Debit Credit Cash $34,000 Accounts Receivable 28,000 Prepaid Insurance 7,500 Office Supplies 3,000 Land 48,000 Building 150,000 Accumulated Depreciation—Building $15,500 Equipment 71,000 Accumulated Depreciation—Equipment 7,000 Accounts Payable 23,000 Salaries Payable 4,000 Unearned Revenue 29,000 Mortgage Payable 100,000 Common Stock 10,000 Retained Earnings 11,500 Dividends 22,000 Service Revenue 280,000 Salaries Expense 62,000 Depreciation Expense—Building and Equipment 5,900 Supplies Expense 14,000 Insurance Expense 14,600 Utilities Expense 20,000 Total $480,000 $480,000 After the closing entries are posted, what is the balance in Retained Earnings?

Answer 1

Answer:

Ending RE           153,000

Explanation:

Retained Earning will be calcualte as follows:

$Beginning Retained Earnings +/- Net Income/Loss - Dividends Equals Ending Retained Earning$

We need to solve for the net incoem in order to solve for ending Retained Rearnings (RE)

Net Income: Revenues - Expenses

Service Revenue            280,000

Salaries Expense             (62,000)

Depreciation Expense       (5,900)

Supplies Expense             (14,000)

Insurance Expense           (14,600)

Utilities Expense              (20,000)

             Net Income       163,500

Retained Earnings 11,500

Net Income         163,500

Dividends            (22,000)

Ending RE           153,000