The income statement for the month of June, 2014 of Taylor Enterprises contains the following information: At June 1, 2014, Taylor reported Retained Earnings of ₤35,000. The company paid no dividends during June. At June 30, 2014, the company will report Retained Earnings of
A) ₤35,000.
B) ₤43,000.
C) ₤38,900.
D) ₤31,100.

Question

The income statement for the month of June, 2014 of Taylor Enterprises contains the following information:  At June 1, 2014, Taylor reported Retained Earnings of ₤35,000. The company paid no dividends during June. At June 30, 2014, the company will report Retained Earnings of
A) ₤35,000. 
B) ₤43,000. 
C) ₤38,900. 
D) ₤31,100.

Quizplus · Accepted Answer

The net income for the month of June can be calculated by subtracting total expenses from total revenues: 
Revenues - Expenses = Net Income 
₤68,000 - ₤47,100 = ₤20,900 
Therefore, the company's Retained Earnings at June 30, 2014 can be calculated as: 
Retained Earnings (June 1) + Net Income = Retained Earnings (June 30) 
₤35,000 + ₤20,900 = ₤55,900 
The correct answer is C) ₤38,900 because that is the only option that represents an increase in Retained Earnings from June 1 to June 30.

The Income Statement for the Month of June, 2014 of Taylor