The following accounts are taken from the December 31,Year 4 financial statements of a company. What is the amount of retained earnings on the Balance Sheet at the end of Year 4?

Question

The following accounts are taken from the December 31,Year 4 financial statements of a company.  What is the amount of retained earnings on the Balance Sheet at the end of Year 4?

Quizplus · Accepted Answer

Total revenues = Service Revenue + Other Revenue
= $10,000 + $300 = $10,300
Total expenses = Salaries Expense + Interest Expense + Income Tax Expense + Selling & Administrative Expenses + Other Expenses+ Other Operating Expenses
= $3,000 + $75 + $400 + $2,500 + $500 + $2,000 = $8,475
Net income = Revenue - Expenses
= $10,300 − $8,475 = $1,825
Ending Retained Earnings = Beginning Retained Earnings + Net income - Dividends
= $4,800 + $1,825 − $1,900 = $4,725

The Following Accounts Are Taken from the December 31,Year 4