Question

If the subtotal of the income statement debit column is $250,000, the subtotal of the income statement credit column is $300,000, and the total of the Statement of Retained Earnings debit column is $475,000, what is the beginning balance in Retained Earnings

Answer 1

$425,000

Step-by-step explanation:

Calculation to determine the beginning balance in Retained Earnings

First step is to prepare the Income Statement

Revenues $300,000

Less Expenses ($250,000)

Profit $50,000

Now let calculate the beginning balance in Retained Earnings

Using this formula

Beginning balance in Retained Earnings= Statement of Retained Earnings debit column -Income Statement Profit

Let plug in the formula

Beginning balance in Retained Earnings=$475,000-$50,000

Beginning balance in Retained Earnings=$425,000

Therefore the beginning balance in Retained Earnings is $425,000