# Retained earnings account balance As of January 1, Retained Earnings had a credit balance of $314,000. During the year, dividends totaled$10,000, and the business incurred a net loss of $320,000. A. Compute the balance of Retained Earnings as of the end of the year. B. Assuming that there have been no recording errors, will the balance sheet prepared at December 31 balance? Explain. BuyFindarrow_forward ### Financial And Managerial Accounting 15th Edition WARREN + 1 other Publisher: Cengage Learning, ISBN: 9781337902663 #### Solutions Chapter Section BuyFindarrow_forward ### Financial And Managerial Accounting 15th Edition WARREN + 1 other Publisher: Cengage Learning, ISBN: 9781337902663 Chapter 2, Problem 12E Textbook Problem 98 views ## Retained earnings account balanceAs of January 1, Retained Earnings had a credit balance of$314,000. During the year, dividends totaled $10,000, and the business incurred a net loss of$320,000. A. Compute the balance of Retained Earnings as of the end of the year. B. Assuming that there have been no recording errors, will the balance sheet prepared at December 31 balance? Explain.

(a)

To determine

Compute the balance of retained earnings as of the end of the year.

### Explanation of Solution

Statement of retained earnings:

This statement reports the beginning retained earnings and all the changes which led to ending retained earnings. Net income from income statement is added to and dividends are deducted from beginning retained earnings to arrive at the end result, ending retained earnings. The retained earnings account shows a normal balance of credit.

The balance of retained earnings as of the year is calculated as follows:

ReatinedÂ earningsÂ balanceÂ =Â (Beginningx

(b)

To determine

Determine whether the balance sheet prepared at December 31 will balance.

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