assume the balance in the retained earnings account at january 1, 2025 is $11,000, and $2,000 dividends are…

assume the balance in the retained earnings account at january 1, 2025 is $11,000, and $2,000 dividends are declared and paid in 2025. if a credit balance of $18,000 exists in retained earnings after closing out revenues and expenses at the end of 2025, this indicates: a. the company had net income of $20,000. b. the company had a net loss of $20,000. c. the company had net income of $9,000. d. the company had a net loss of $9,000.

assume the balance in the retained earnings account at january 1, 2025 is $11,000, and $2,000 dividends are declared and paid in 2025. if a credit balance of $18,000 exists in retained earnings after closing out revenues and expenses at the end of 2025, this indicates: a. the company had net income of $20,000. b. the company had a net loss of $20,000. c. the company had net income of $9,000. d. the company had a net loss of $9,000.

Answer

Explanation:

Step1: Recall the retained earnings formula

The formula for ending retained earnings is (Ending\ Retained\ Earnings=Beginning\ Retained\ Earnings + Net\ Income - Dividends). Let (Net\ Income = x). We know (Beginning\ Retained\ Earnings=$11,000), (Dividends = $2,000), and (Ending\ Retained\ Earnings=$18,000).

Step2: Substitute values into the formula

Substitute the values into the formula: (18000=11000 + x-2000).

Step3: Solve for (x)

First, simplify the right - hand side of the equation: (18000=x + 9000). Then, subtract 9000 from both sides: (x=18000 - 9000=$9,000). Since (x) (net income) is positive, the company had a net income.

Answer:

A. the company had net income of ($20,000) (Incorrect). B. the company had a net loss of ($20,000) (Incorrect). C. the company had net income of ($9,000) (Correct). D. the company had a net loss of ($9,000) (Incorrect). So the answer is C.