The following information is available from the adjusted trial balance of the Harris Vacation Rental Agency.After closing entries are posted,what will be the balance in the Retained earnings account?
$$\begin{array} { l r }
\text { Total revenues } & \$ 125,000 \
\text { Total expenses } & 60,000 \
\text { Retained earnings } & 8 0 , 0 0 0 \
\text { Dividends } & 15,000
\end{array}$$
A) $65,000.
B) $80,000.
C) $130,000.
D) $145,000.
E) $280,000.

Question

The following information is available from the adjusted trial balance of the Harris Vacation Rental Agency.After closing entries are posted,what will be the balance in the Retained earnings account?
$$\begin{array} { l r } 
\text { Total revenues } & \$ 125,000 \
\text { Total expenses } & 60,000 \
\text { Retained earnings } & 8 0 , 0 0 0 \
\text { Dividends } & 15,000
\end{array}$$
A) $65,000.
B) $80,000.
C) $130,000.
D) $145,000.
E) $280,000.

Quizplus · Accepted Answer

The balance in the Retained Earnings account after closing entries are posted is calculated by adding net income to the beginning Retained Earnings balance and then subtracting dividends. Net income is revenues minus expenses, which is $125,000 - $60,000 = $65,000. Adding this to the beginning Retained Earnings of $80,000 gives $145,000, and then subtracting dividends of $15,000 results in a final balance of $130,000.

The Following Information Is Available from the Adjusted Trial Balance