Frosty Inc.has the following balances on December 31 prior to closing entries:
$$\begin{array} { | l | r | }
\hline \text { Revenues } & \$ 35,000 \
\hline \text { Retained Earnings, Jan. 1 } & 10,000 \
\hline \text { Cash } & 7,000 \
\hline \text { Expenses } & 23,000 \
\hline \text { Accounts Payable } & 4,000 \
\hline \text { Dividends } & 1,000 \
\hline \text { Supplies } & 18,000 \
\hline
\end{array}$$
Based upon the balances above,what net adjustment would be made to Retained Earnings due to closing entries?

Question

Frosty Inc.has the following balances on December 31 prior to closing entries:
$$\begin{array} { | l | r | } 
\hline \text { Revenues } & \$ 35,000 \
\hline \text { Retained Earnings, Jan. 1 } & 10,000 \
\hline \text { Cash } & 7,000 \
\hline \text { Expenses } & 23,000 \
\hline \text { Accounts Payable } & 4,000 \
\hline \text { Dividends } & 1,000 \
\hline \text { Supplies } & 18,000 \
\hline
\end{array}$$
Based upon the balances above,what net adjustment would be made to Retained Earnings due to closing entries?

Quizplus · Accepted Answer

Net income is calculated as Revenues ($35,000) minus Expenses ($23,000), which equals $12,000. Dividends of $1,000 are subtracted from net income to determine the adjustment to Retained Earnings, resulting in an increase of $11,000.

Frosty Inc Based Upon the Balances Above,what Net Adjustment Would Be Made