Question

In: Accounting

Consider the following account starting balances and transactions involving these accounts. Use T-accounts to record the...

Consider the following account starting balances and transactions involving these accounts.
Use T-accounts to record the starting balances and the offsetting entries for the transactions.

The starting balance of Cash is $9,700
The starting balance of Inventory is $3,800
The starting balance of Retained Earnings is $23,600

1. Sell product for $30 in cash with historical cost of $24
2. Sell, deliver, and receive payment of $40 for service
3. Consume good or service and pay expense of $2

What is the final amount in Retained Earnings?

Solutions

Expert Solution

  • All working forms part of the answer

---Left side is DEBIT SIDE, Right side is CREDIT SIDE.

Cash

Beginning balance

$                           9,700.00

Expenses (3)

$                    2.00

Sales Revenue (1)

$                                 30.00

Ending balance

$           9,768.00

Service revenue (2)

$                                 40.00

Total

$                           9,770.00

Total

$           9,770.00

Inventory

Beginning Balance

$                           3,800.00

Cost of Goods Sold (1)

$                 24.00

Ending balance

$           3,776.00

Total

$                           3,800.00

Total

$           3,800.00

Retained Earnings

Expenses (3)

$                                   2.00

Beginning balance

$         23,600.00

Ending balance (or Final Amount)

$                         23,644.00

Gross Profits (1)

$                    6.00

Service Revenue (2)

$                 40.00

Total

$                         23,646.00

Total

$         23,646.00

  • Based on Above T account of Retained earnings, the final amount in Retained Earnings = $ 23,644.

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