benedict company compiled the following financial information as of december 31, 2022: service revenue…

benedict company compiled the following financial information as of december 31, 2022: service revenue $1,120,000 common stock 240,000 equipment 320,000 salaries and wages expense 400,000 rent expense 100,000 depreciation expense 500,000 cash 280,000 dividends 80,000 supplies 40,000 accounts payable 160,000 accounts receivable 120,000 retained earnings, 1/1/2022 600,000 benedicts retained earnings balance at december 31, 2022 is a. $600,000. b. $720,000. c. $640,000. d. $40,000.

benedict company compiled the following financial information as of december 31, 2022: service revenue $1,120,000 common stock 240,000 equipment 320,000 salaries and wages expense 400,000 rent expense 100,000 depreciation expense 500,000 cash 280,000 dividends 80,000 supplies 40,000 accounts payable 160,000 accounts receivable 120,000 retained earnings, 1/1/2022 600,000 benedicts retained earnings balance at december 31, 2022 is a. $600,000. b. $720,000. c. $640,000. d. $40,000.

Answer

Explanation:

Step1: Calculate net income

Net income = Service revenue - Salaries and wages expense - Rent expense - Depreciation expense Net income = $1,120,000 - 400,000 - 100,000 - 500,000 = $120,000

Step2: Calculate ending retained earnings

Ending retained earnings = Beginning retained earnings + Net income - Dividends Ending retained earnings = $600,000+120,000 - 80,000 = $640,000

Answer:

c. $640,000