Kincaid Company's Retained Earnings balance on January 1 was $6,000. During the current year, Kincaid earned $3,400 in revenues and incurred $4,200 in expenses. Kincaid paid $2,500 in dividends, all in cash. After the closing entries are made, Kincaid's Retained Earnings balance on December 31 will be:

Question

Quizplus · Accepted Answer

To calculate the Retained Earnings balance on December 31, we need to start with the Retained Earnings balance on January 1 and then adjust for the current year's revenues, expenses, and dividends.

Retained Earnings balance on January 1 = $6,000
Add: Current year's revenues = $3,400
Subtract: Current year's expenses = $4,200
Subtract: Dividends paid = $2,500

Retained Earnings balance on December 31 = $6,000 + $3,400 - $4,200 - $2,500 = $2,700

Therefore, the correct answer is D) $2,700.

Kincaid Company's Retained Earnings Balance on January 1 Was $6,000