Question

The following accounts and balances are taken from Anstett Company's adjusted trial balance:

Accounts Payable $10,000
Accounts Receivable 3,000
Accumulated Depreciation 1,800
Depreciation Expense 1,800
Dividends 2,000
Insurance Expense 2,300
Interest Revenue 1,340
Prepaid Insurance 2,320
Retained Earnings 10,100
Salary Expense 25,100
Service Revenue 37,800
What is the ending balance in Retained Earnings after the closing entries are completed?
A $15,720
B $20,040
C $18,240
D $18,040

Answer 1

D. $18,040

Step-by-step explanation:

Given the above information,

Total revenue = Interest revenue + Service revenue

= $1,340 + $37,800

= $39,140

Total expenses = Depreciation expense + Insurance expense + Salary expense

= $1,800 + $2,300 + $25,100

= $29,200

Net income = Total revenue - Total expenses

= $39,140 - $29,200

= $9,940

Therefore,

Ending retained earning balance = Beginning retained earnings + Net income - Dividends

= $10,100 + $9,940 - $2,000

= $18,040