Gerdes Psychological Services, Inc., closes its temporary accounts once each year on December 31. The company recently
Question:
Gerdes Psychological Services, Inc., closes its temporary accounts once each year on December 31. The company recently issued the following income statement as part of its annual report:
GERDES PSYCHOLOGICAL SERVICES, INC. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2011 | ||
Revenue: | ||
Counseling revenue | $400,000 | |
Expenses: | ||
Advertising expense | $ 1,800 | |
Salaries expense | 94,000 | |
Office supplies expense | 1,200 | |
Utilities expense | 850 | |
Malpractice insurance expense | 6,000 | |
Office rent expense | 24,000 | |
Continuing education expense | 2,650 | |
Depreciation expense: fixtures | 4,500 | |
Miscellaneous expense | 6,000 | |
Income taxes expense | 29,400 | 170,400 |
Net income | $ 54,600 |
The firm’s statement of retained earnings indicates that a $8,000 cash dividend was declared and paid during 2011.
a). Prepare the necessary closing entries on December 31, 2011.
b). If the firm’s Retained Earnings account had a $92,000 balance on January 1, 2011, at what amount should Retained Earnings be reported in the firm’s balance sheet dated December 31, 2011?
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-1259692406
18th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello