notes payable, due 2028: 2,000\ncommon stock: 6,800\nretained earnings: 3,200\ndividends: 1,200\nservice…

notes payable, due 2028: 2,000\ncommon stock: 6,800\nretained earnings: 3,200\ndividends: 1,200\nservice revenue: 32,600\nrent expense: 1,400\nsupplies expense: 1,100\nsalaries expense: 6,300\ndepreciation expense—building: 1,200\nutilities expense: 1,800\ntotals: $65,100 $65,100\nwhat is the retained earnings balance at december 31, 2025?\na. $24,000\nb. $20,800\nc. $19,600\nd. $22,800

notes payable, due 2028: 2,000\ncommon stock: 6,800\nretained earnings: 3,200\ndividends: 1,200\nservice revenue: 32,600\nrent expense: 1,400\nsupplies expense: 1,100\nsalaries expense: 6,300\ndepreciation expense—building: 1,200\nutilities expense: 1,800\ntotals: $65,100 $65,100\nwhat is the retained earnings balance at december 31, 2025?\na. $24,000\nb. $20,800\nc. $19,600\nd. $22,800

Answer

Explanation:

Step1: Calculate Net Income

Net Income = Service Revenue - (Rent Expense + Supplies Expense + Salaries Expense + Depreciation Expense - Building + Utilities Expense) Net Income = (32600-(1400 + 1100+6300+1200+1800)) Net Income = (32600 - 11800=20800)

Step2: Calculate Ending Retained Earnings

Ending Retained Earnings = Beginning Retained Earnings + Net Income - Dividends Assume beginning retained earnings is (0) (not given other - wise, and we calculate based on the data provided in the problem - like items related to income statement and dividends). Ending Retained Earnings=(0 + 20800-0) (Since no beginning retained earnings data is given except the income - statement - related calculation and dividends. If we consider the "Retained Earnings" value of (3200) as a mis - understanding (because in the income - statement - based retained earnings calculation, if it's a new - start or no prior - period retained earnings data except the current - period income and dividend), but if we assume the (3200) is a wrong number (because in the formula (Ending\ Retained\ Earnings=Beginning\ Retained\ Earnings + Net\ Income - Dividends), and if we use the data from the problem for income - statement elements. Another way: if we consider that the (3200) is a typo and we calculate based on the revenue and expenses. Let's re - calculate properly. Net Income=(32600-(1400 + 1100+6300+1200+1800)=32600 - 11800 = 20800) If we assume beginning retained earnings is (0) (since no other data about prior - year retained earnings is given except the account named "Retained Earnings" which may be a mis - placement in the trial - balance - like list. Because in a proper accounting cycle, retained earnings from prior periods would be carried forward. But given the data: Ending Retained Earnings=Net Income - Dividends (assuming no prior - period retained earnings, or the (3200) is not relevant as a beginning retained earnings in the context of this income - statement - to - retained - earnings calculation) Ending Retained Earnings=(20800-0 = 20800) (because dividend is (1200), but wait, no - the formula is (Ending\ Retained\ Earnings=Beginning\ Retained\ Earnings+Net\ Income - Dividends). If we assume beginning retained earnings is (0) (as no other data), (Net\ Income = 32600-(1400 + 1100+6300+1200+1800)=20800), (Dividends = 1200) (Ending\ Retained\ Earnings=0+20800 - 1200=19600)

Answer:

C. $19,600