The following trial balance of JB Company at December 31, 2017, has been adjuste

Question

The following trial balance of JB Company at December 31, 2017, has been adjusted except for income taxes. The income tax rate is 30%.

During 2017, estimated tax payments of $225,000 were paid and debited to prepaid taxes. There were no differences between financial statement and taxable income for 2017.
Included in accounts receivable is $400,000 due from a loyal customer. Special terms were granted to this customer to make payments of $100,000 semi-annually every March 1 and September 1.
In JB Company's December 31, 2017 Balance Sheet, what amount should be reported as total retained earnings?

DR CR Accounts receivable, net $725,000 Accounts payable 250,000 Accumulated depreciation 125,000 Cash 185,000 Contributed capital 650,000 Expenses 3,750,000 Goodwill 140,000 Prepaid taxes 225,000 Property, plant, and equipment 850,000 Retained earnings, 1/1/2017 350,000 Revenues 4,500,000 5,875,000 5,875,000

Explanation / Answer

Calculation of Retained Earnings Profit 750000 (4500000-3750000) Less: Taxes @ 30% 225000 Profit after tax 525000 Add: Opening Retained Earnings 350000 Total Retained Earnings, 31/12/2017 875000

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