An adjusted trial balance is given below

Question

Debit Credit
Cash $15,000
Accounts Receivable 3,000
Prepaid Rent 800
Merchandise Inventory 27,000
Accounts Payable $4,200
Salaries Payable 1,500
Notes Payable 800
Common Stock 9,000
Retained Earnings 3,800
Dividends 2,000
Sales Revenue 95,500
Sales Returns and
Allowances 1,400
Sales Discounts 700
Cost of Goods Sold 20,000
Salaries Expense 21,000
Rent Expense 15,000
Selling Expense 8,100
Supplies Expense 800
Total $114,800 $114,800

What will be the final balance in the corporation's Retained Earnings account after recording the closing entries?
A) $30,300
B) $32,300
C) $17,500
D) $1,800

Answer 1

A .Calculation of Retained Earnings balance:
Beginning balance, Retained Earnings $3,800
Plus: Net Income* 28,500
Dividends (2,000 )
Closing balance, Retained Earnings $30,300

Calculation of Net Income*
Sales Revenue $95,500
Less:
Sales Returns and Allowances 1,400
Sales Discounts 700
Cost of Goods Sold 20,000
Salaries Expense 21,000
Rent Expense 15,000
Selling Expense 8,100
Supplies Expense 800
Net Income $28,500