Answer and Explanation:
a.
Retain earnings, year 2
= retained earnings year 1 + earning for year 2
= $825,000 + ($245,000 - $65,000)
= $825,000 + $180,000
= $1,005,000
Therefore, The December 31, Year 2, Retained Earnings balance is $1,005,000.
b.
trading inverstments are classified under current assets. the closing balance of trading inverstments is:
trading inverstments purchased at cost in year 2 $346,000
trading inverstments sold at cost in year 2 $66,000
balance of trading inverstments at cost $280,000
The balance sheet is present like:
D-Tec Inc
balance sheet
particulars amount($)
current asstes
trading inverstments(at cost) 280,000
valuation allowance for trading inverstment (72,500)
trading inverstments(at fair value) 207,500
