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Retained Earnings T-Account: Debit- 200 and 400/ Credit-700 Dividends T-Account: Debit-100, 100, and 200/ Credit-400 Income...

Retained Earnings T-Account: Debit- 200 and 400/ Credit-700

Dividends T-Account: Debit-100, 100, and 200/ Credit-400

Income Summary T-Acount: Debit- 1,500/ Credit- 800, and 700

Find (a) the revenue for the period (b) Dividends for the period (c) Net income (d) Ending balance of retained earnings

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Expert Solution

Requirement (a)

Revenue for the period = $1500.

Revenue earned in a period is debited to income summery account and the amount debited to income summery account.

Closing entry to transfer revenue to income summery is as follows

Revenues                            $1500

                Income summery            $1500

Requirement (b)

Dividends for the period= $400

Dividend account is debited when dividends is declared and all the balance in dividend is transferred to retained earnings account at the end of the year. Amount debited to dividend are $200, $100 and $100 which makes a total $400.

Requirement (c )

Net income = $700

Net income is transferred to retained earnings account when debit in income summary is less than credits in income summery account.

Total credit in income summery is $700 which means $700 is Net income of the year.

Requirement (d)

Ending balance of Retained earnings = $300

Total credit for income plus beginning balance minus debit for dividend is the balance in retained earnings account.

Total credits = $700

Total debits =$400

Beginning balance = $100

Ending balance = $700+100-400= $300

ekkarill92 answered 1 year ago
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