Ask Question
19 October, 04:22

At the beginning of April, Owl Corporation has a balance of $13,000 in the Retained Earnings account. During the month of April, Owl had the following external transactions. 1. Issue common stock for cash, $11,000. 2. Provide services to customers on account, $8,500. 3. Provide services to customers in exchange for cash, $3,200. 4. Purchase equipment and pay cash, $7,600. 5. Pay rent for April, $1,100. 6. Pay employee salaries for April, $3,500. 7. Pay dividends to stockholders, $2,000. Using the external transactions above, compute the balance of Retained Earnings at April 30.

+4
Answers (1)
  1. 19 October, 08:10
    0
    The part of net income not paid as dividend is included in retain earning account. Its balance is reported in balance sheet.

    To calculate retain earning balance we will first calculate net income for the year. After calculation of net income we will add retain earning opening balance in it and deduct dividend paid from it. Detail calculations are given below.

    Net income Calculation

    Service income (8,500 + 3,200) = 11,700

    Rent expense (1,100)

    Salaries expense (3,500)

    Net income 7,100

    Retain earning

    Net income 7,100

    Pay dividend (2,000)

    Retain earning opening balance 13,000

    Retain earning closing balance $ 18,100
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “At the beginning of April, Owl Corporation has a balance of $13,000 in the Retained Earnings account. During the month of April, Owl had ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers