[drummer54]

I am having a hard time trying to answer the following problem.

Jan 1 200X1 Dec. 31,200X1
Cash 14,000 18,000
Accounts Receivable 19,000 26,000
Supplies 2,200 1,600
Equipment 45,000 42,000
Accounts Payable 2,400 10,100
Common Stock 3,000 3,000

a) What was the amount of Retained Earnings at
Jan. 1,20X1? _________________

Dec. 31,20X1_________________

b) Assuming that there were no issues of stock during the year, but paid dividends out of $5,000. What was the net income (loss) for the year?
$_________________
Is it income or loss?

Thanks for your help.

[NeedKarma]

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[CaptainForest]

a)
Jan 1 R/E = 14,000 + 19,000 + 2,200 + 45,000 – 2,400 – 3,000 = 74,800

Dec. 31 R/E = 18,000 + 26,000 + 1,600 + 42,000 – 10,100 – 3,000 = 74,500

b)
Beginning R/E 74,800
Less: Dividends of 5,000
Net Income Adjustment

Total Ending R/E 74,500

Without the Net Income adjustment, retained earnings at Dec. 31 should be 69,800.

Therefore a net income of 4,700 was made in order to arrive at a Dec. 31 R/E of 74,500


Check to make sure:
Beginning R/E 74,800
Less: Dividends of 5,000
Plus Net Income 4,700
Total Ending R/E 74,500

The numbers work!