Question

The Retained Earnings account has a credit balance of $21,000 before closing entries are made. If total revenues for the period are $59,200, total expenses are $41,800 and dividends are $11,000, what is the ending balance in the Retained Earnings account after all closing entries are made?

A. $10,000
B. $27,400
C. $17,400
D.$21,000
E.$38,400

Answer 1

The ending balance in the Retained Earnings account after all closing entries are made is $27,400.

Step-by-step explanation:

The ending balance in the Retained Earnings account after all closing entries are made can be calculated as follows:

1. Calculate the net income by subtracting total expenses from total revenues: $59,200 - $41,800 = $17,400
2. Subtract dividends from net income: $17,400 - $11,000 = $6,400
3. Add the beginning balance to the net income minus dividends: $21,000 + $6,400 = $27,400

Therefore, the ending balance in the Retained Earnings account after all closing entries are made is $27,400. The correct answer is option B.