Question

Stockton Company Adjusted Trial Balance December 31

Cash 7,530
Accounts Receivable 2,100
Prepaid Expenses 700
Equipment 13,700
Accumulated Depreciation 1,100
Accounts Payable 1,900
Notes Payable 4,300
Common Stock 1,000
Retained Earning 12,940
Dividends 790
Fees Earned 9,250
Wages Expense 2,500
Rent Expense 1,960
Utilities Expense 775
Depreciation Expenses 250
Miscellaneous Expenses 185
Totals 30,490 30,490

Determine the retained earnings ending balance.

a. $12,150
b. $21,400
c. $6,480
d. $15,730

Answer 1

Answer: D.) $15,730

Step-by-step explanation:

Retained Earning = beginning retained earning + Net income - cash Dividend

Net income = Fees earned - Expenses

Fees Earned 9,250 - Wages Expense 2,500 -

Rent Expense 1,960 - Utilities Expense 775 - Depreciation Expense 250 - Miscellaneous Expense 185 = 3,580

Net income = $3,580

Beginning retained earning = $12,940

Cash dividend = $790

Retained earning = $12,940 + $3,580 - $790 = $15,730