A merchandiser uses a perpetual inventory system. The beginning Retained Earnings balance of the merchandiser was $110,000
During the year, Sales Revenue amounted to $80,000, Sales Returns and Allowances were $2,000, Sales Discounts were $4,000, Cost of Goods Sold was $40,000, and all other expenses totaled $12,000. The company declared and paid $25,000 as dividends. The closing balance of Retained Earnings would be ________.
A) $111,000
B) $107,000
C) $98,000
D) $110,000
B .The closing journal entries would be:
Sales Revenue 80,000
Income Summary 80,000
Income Summary 58,000
Sale Returns and Allowances 2,000
Sales Discounts 4,000
Cost of Goods Sold 40,000
Other Expenses 12,000
Income Summary 22,000
Retained Earnings 22,000
Retained Earnings 25,000
Dividends 25,000
Closing balance of Retained Earnings:
Beginning balance $110,000
Net income 22,000
Dividends (25,000 )
Closing balance of Retained Earnings $107,000
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