As of January 1st, retained earnings has a credit balance of21,800. During the y

Question

As of January 1st, retained earnings has a credit balance of21,800. During the year, dividends totaled 1,500, and thebusiness incurred a net loss of 24,000. a. Calculate the balance of retained earnings as of the end ofthe year. b. Assuming that tere have been no recordings errors, will thebalance sheet prepared at December balance? As of January 1st, retained earnings has a credit balance of21,800. During the year, dividends totaled 1,500, and thebusiness incurred a net loss of 24,000. a. Calculate the balance of retained earnings as of the end ofthe year. b. Assuming that tere have been no recordings errors, will thebalance sheet prepared at December balance?

Explanation / Answer

A. RetainedEarnings Beginning retained earnings $21,800 Net Loss ($24,000) Dividend paid ($1,500) Ending retained earning(deficit) ($3,700) B. If there are no recording errors, thenthe balance sheet must balance because of the use of double entrybookeeping where by in each transaction total debits equal to totalcredits.

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