Question

Capri Company began the current period with a $41,000 credit balance in the Retained Earnings account. At the end of the period, the company’s adjusted account balances include the following temporary accounts with normal balances.

Services revenue $ 92,000 Interest revenue $ 9,200
Salaries expense 40,500 Dividends 16,000
Depreciation expense 8,400 Utilities expense 6,400

Answer 1

ending balance of the Retained Earnings account for Capri Company is $70,900.

To calculate the ending balance of the Retained Earnings account for Capri Company, we need to follow the steps of the accounting cycle, which includes closing the temporary accounts and transferring their balances to the Retained Earnings account.

First, we need to close the revenue accounts and transfer their balances to the Retained Earnings account:

Services revenue $92,000

Interest revenue $9,200

Total revenue $101,200

To close the revenue accounts, we debit them and credit the Retained Earnings account:

Debit Services revenue $92,000

Debit Interest revenue $9,200

Credit Retained Earnings $101,200

Next, we need to close the expense accounts and transfer their balances to the Retained Earnings account:

Salaries expense $40,500

Depreciation expense $8,400

Utilities expense $6,400

Total expenses $55,300

To close the expense accounts, we credit them and debit the Retained Earnings account:

Credit Salaries expense $40,500

Credit Depreciation expense $8,400

Credit Utilities expense $6,400

Debit Retained Earnings $55,300

Finally, we need to close the Dividends account and transfer its balance to the Retained Earnings account:

Debit Dividends $16,000

Credit Retained Earnings $16,000

The ending balance of the Retained Earnings account can be calculated as follows:

Beginning balance $41,000

Add: Total revenue $101,200

Less: Total expenses $55,300

Less: Dividends $16,000

Ending balance $70,900

Therefore, the ending balance of the Retained Earnings account for Capri Company is $70,900.