Undem Scientific provides research consulting services to both university and corporate clients. The company closes its temporary accounts once each year on December 31. It recently issued the following income statement as part of its annual report.

The firm’s statement of retained earnings indicates that a $10,000 cash dividend was declared and paid in the current year. 

a. Prepare the necessary closing entries on December 31, current year. 

b. If the firm’s Retained Earnings account had a $80,000 balance on January 1, current year, at what amount should Retained Earnings be reported in the firm’s balance sheet dated December 31, current year?

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UNDEM SCIENTIFIC INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, CURRENT YEAR Revenue: Consulting revenue-university clients. Consulting revenue-corporate clients. Expenses: Advertising expense... ... Depreciation expense: computers and diagnostic equipment Rent expense... Office supplies expense.. Travel expense. Utilities expense. Telephone and Internet expense. Salaries expense..... Interest expense. Net loss..... $ 44,000 152,000 60,000 4,000 200,000 3,000 2,000 360,000 $ 300,000 500,000 $ 800,000 5,000 830,000 $( 30,000)