Question

QP Corp. has a beginning retained earnings balance of $16,000. An adjusted trial balance shows total expenses of $24,000 and service revenue of $28,000. If dividends for the year were $1,800, determine the ending retained earnings balance for the year.

Answer 1

$18,200

Step-by-step explanation:

The formula and the computation of the ending retained earnings balance is shown below:

Ending retained earnings balance = Beginning retained earning balance + service revenue - total expenses - dividend paid for the year

= $16,000 + $28,000 - $24,000 - $1,800

= $18,200

The service revenue minus total expenses are also known as net income