Question

Parker Company has a balance of $23,000 in retained earnings on January 1. During the year, Parker reported revenues of $72,000 and expenses of $56,000. Parker also paid a dividend of $11,000.
What is the amount of retained earnings on December 31?

Answer 1

Answer:

The amount of retained earnings on December 31 is $ 28,000.

Explanation:

This problem requires us to calculate closing balance of retain earning account. The detail about entries that hit retain earning such as net income and dividend is given in the question. We can calculate closing retain earning using following equation.

opening balance + net income = dividend + closing balance

closing balance = 23,000 + (72,000-56,000) - 11,000

closing balance = $ 28,000