Question

Spring 2020: Financial Accounting Shivam Patel & | 02/16/20 5:42 PM Save Homework: Chapter 4 Score: 0 of 1 pt X E4-23 (book/static) 8 of 9 (9 complete) HW Score: 80.36%, 723 of 9 pts Question Help McGregor Insurance Agency started the year with a beginning Retained Earnings balance of $27.500. During the year, McGregor Insurance Agency earned $34.000 of Service Revenue and incurred $23,500 of various expenses. Dividends of $12,000 from the business were paid to stockholders. After the closing entries are recorded and posted, what will be the balance of Retained Earnings? Post the beginning balance and closing entry amounts to the Retained Earnings account. Use a "Bal" posting reference to show the beginning and ending balance of the Retained Earnings account. Use a "Clos. posting reference to show the amounts that are posted while dosing the books. The revenue and expense amounts should be combined into one closing entry for net income (like you are closing the Income Summary account) Retained Earnings Bal 27500

Answer 1

Solution:

Closing Balance of Retained Earnings is $ 26,000.

Retained Earnings
Dividends	$       12,000	Bal	$                27,500
		Income Summary	$                10,500
		Bal	$                26,000

Notes:

1) Following are the closing entries

Date	Description	Post Ref	Debit	Credit
Year End	Service Revenue	Clos	$          34,000
	Income Summary			$           10,500
	Expenses			$           23,500
	(To close revenue and expense account )
Year End	Income Summary	Clos	$          10,500
	Retained Earnings			$           10,500
	(To close income summary )
Year End	Retained Earnings	Clos	$          12,000
	Dividends			$           12,000
	(To close dividend account to retained earnings)