Question

Carpenter and Sonsʹ balance sheet on January 1, 2012, had total assets of $73,000, total liabilities of $20,000, paid-in capital of $30,000, and retained earnings of $23,000. During the month of January, Carpenter and Sonsʹ recognized revenues of $73,000, cost of goods sold of $47,000, depreciation expense of $12,000, the payment of February and Marchʹs rent totaling $2,500, and salary expense of $8,000. The retained earnings balance at January 31, 2012, will be ___

Answer 1

Answer:

The retained earnings balance at January 31, 2012, will be $29,000

Explanation:

We know that, the ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid

where,

Net income = Sales revenues - cost of goods sold - depreciation expense - salary expense

= $73,000 - $47,000 - $12,000 - $8,000

= $6,000

And, the beginning retained earning balance is $23,000

Now put these values to the above formula  

So, the value would equal to

= $23,000 + $6,000

= $29,000