Question

The following information was drawn from the accounting records of Dorman Company as of December 31, 2013, before the temporary accounts had been closed. The company’s cash balance was $3,600, and its land account had a $8,000 balance. Notes payable amounted to $4,000.
The balance in the Common Stock account was $2,000. The company had revenues of $7,500 and expenses of $3,400, and dividends amounted to $1,000.

Required
a. Identify the accounts that would be closed to Retained Earnings at the end of the accounting period.
b. Assuming that Dorman’s beginning balance (as of January 1, 2013) in the Retained Earnings account was $2,500 determine its balance after the temporary accounts were closed at the end of 2013.
c. What amount of net income would Dorman Company report on its 2013 income statement?
d. Explain why the amount of net income differs from the amount of the ending Retained
Earnings balance.
e. What are the balances in the revenue, expense, and dividend accounts on January 1, 2014?



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  • CreatedOctober 12, 2013
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