Question

18. The balance in Hope Corporation's retained earnings account at 6/1/2017 was $300,000. June net income was $80,000 BEFORE considering the following items: o Depreciation for the month of June was $2,000. o Interest income of $100 was earned during June. The interest will be collected from the bank in July o Purchased supplies at the beginning of June at a cost of $800. The supplies were expensed at the time of purchase but the supplies were not used until July. o Dividends of $1,000 were declared during June and paid during July. o $4,500 of fees were received during June for services not yet performed o $2,700 rent was paid to the landlord in June for office space to be used by the company during July o The company performed $1,200 worth of services in June. The customer paid for these services in advance during May. After considering the effects of the above items, the company's retained earnings balance at 6/30/2017 is: a. $379,100 b. $79,100 C. $380,900 d. $377,900

Answer 1

Calculate adjusted net income

Unadjusted net income	80000
depreciation expense	-2000
Interest income	100
Supplies	800
Service revenue	1200
adjusted net income	80100

Ending balance of retained earnings = 300000+80100-1000 = 379100

So answer is a) $379100