Question

Stockton CompanyAdjusted Trial BalanceDecember 31Cash 7,530 Accounts Receivable 2,100 Prepaid Expenses 700 Equipment 13,700 Accumulated Depreciation 1,100Accounts Payable 1,900Notes Payable 4,300Common Stock 1,000Retained Earning 12,940Dividends 790 Fees Earned 9,250Wages Expense 2,500 Rent Expense 1,960 Utilities Expense 775 Depreciation Expenses 250 Miscellaneous Expenses 185 Totals 30,490 30,490Determine the retained earnings ending balance.a) $12,150b) $21,400c) $6,480

d) $15,730

Answer 1

The correct option is D,$15730

Step-by-step explanation:

Net income in the year needs to be computed first.

net income=fees earned-wages expense-rent expense-utilities expense-depreciation expense-miscellaneous expense

net income=$9250-$2500-$1960-$775-$250-$185=$3580

Ending retained earnings=beginning retained earnings+net income-dividends

ending retained earnings=$ 12,940+$3580 -$790=$15730