Question

The adjusted trial balance of Tahoe Company at the end of the accounting year, December 31, 2016, showed the following: Account Titles Adjusted Trial Balance Debits Credits Cash $20,000 Machinery 90,000 Accumulated depreciation $16,000 Accounts payable 7,000 Capital stock 20,000 Retained earnings 59,000 Service revenue 40,000 Interest expense 4,000 Operating expenses 17,000 Depreciation expense 11,000 Total $142,000 $142,000 Required: B. Calculate the 2016 ending balance in retained earnings.

Answer 1

$67,000

Step-by-step explanation:

Retained Earnings = Opening Balance + Profit for the Year - Dividends

where,

Profit for the Year = Sales - Expenses

= $40,000 - (4,000 + 17,000 + 11,000)

= $8,000

therefore,

Retained Earnings = $59,000 + $8,000 = $67,000