[junezz2000]

If the year-end financial staement the income staement shoed net income of $23,700, and the balance sheet showed ending reained earnings of $91,000. The firm determined that adjustments should be made that would increase revenues by 5,000 and increase expenses by $8,400.

Calculate the amounts of net income and retained earnings after the adjustments are made.

[pready]

First thing you need to know what is Net Income. Net Income is Revenues minus Expenses. So an increase in revenues or a dercease in expenses will increase Net Income, and a decrease in revenues or an Increase in expenses will decrease Net Income.

Now knowing this you start with the Net Income of $23,700
Now add adjustments that would increase revenues by $5,000 and subtract adjustments that would increase expenses by $8,400

So: Net Income of $23,700 plus revenue increase of $5,000 minus expenses increase of $8,400 equals Corrected Net Income of $20,300

For Reataine Earnings take your ending dbalance of $91,000 and subtract out your Net Income of $23,700 and add your Corrected Net Income of $20,300 to get your Corrected Ending Retained Earnings.

So: Ending Retained Earnings of $91,000 minus Net Income of $23,700 plus Corrected Net Income of $20,300 equals Corrected Ending Retained Earnings of $87,600