C Chegg Study Guided Solut al&Global; and We Workshop Two AssignmentX ?your ques
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C Chegg Study Guided Solut al&Global; and We Workshop Two AssignmentX ?your question was answere O eztomheducation.com/hm.tpa value 750 points Exercise 2-20 Closing entries LO 2-6 Rollins Company's accounting records show an after-closing balance of $19,400 in its Retained Earnings account on December 31, 2014. During the 2014 accounting cycle, Rollins earned $15,100 of revenue incurred $9,200 of expense, and paid $1,500 of dividends. Revenues and expenses were recognized evenly throughout the accounting period Required a. Determine the balance in the Retained Earnings account as of January 1, 2015 earnings, January 1,2015 19,400 Balance in the re b. Determine the balance in the temporary accounts as of January 1, 2014 Balance in the temporary accounts, January 1, 2014 15,100 O Type here to search 4o 2 5 6Explanation / Answer
a) The balance in the retained earnings account as of January 1, 2015 = $19400. This is because the balance of $19400 on Dec 31, 2014 is an after-closing balance which means, the balance has been arrived at after passing all the closing entries of the temporary accounts like revenue, expense and dividend.
b) The balance in the temporary account as on Jan1, 2014 is $0. As the accounting year starts from Jan 1, 2014, the company has closed all the temporary accounts on Dec 31, 2013, the end of the previous year.
3) After closing balance in retained earnings account on Dec 31, 2013
= After closing balance in retained earnings account on Dec 31, 2014 + expenses for the year 2014 + dividend paid in 2014 – Revenue earned during 2014
= $19400 + $9200 + $1500 - $15100
= $15000
4) Revenue and expenses were recognised evenly throughout the period. At June 30,
Revenue recognised = $15100 / 2 = $7550
Expenses recognised = $9200 / 2 = $ 4600
Assuming the dividend has been paid at the year end,
The balance in retained earnings in June 30, 2014 = $15000 + $7550 - $4600 = $17950
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