Question

The following information was taken from the records of Valentine Corporation for the year ended December...

The following information was taken from the records of Valentine Corporation for the year ended December 31, 2016.

Advertising expense

$40,000

Income tax expense

26,000

Accounts payable

26,900

Dividends paid

30,000

Retained earnings (Jan 1, 2016)

115,720

Consulting fees revenue

200,000

Rent expense

23,400

Supplies expense

33,800


The retained earnings reported by Valentine Corporation as of December 31, 2016 is:

A.

$158,490
B.

$111,590
C.

$162,520
D.

$158,090
Business   Accounting   
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Answer #1

Answer:

Retained Earnings, December 31, 2016 = Retained Earnings, January 1, 2016 + Net Income – Dividend

Net Income = Revenue – Expenses
Revenue = $200,000

Expenses = Advertising Expense + Income Tax Expense + Rent Expense + Supplies Expense
Expenses = $40,000 + $26,000 + $23,400 + $33,800
Expenses = $123,200

Net Income = $200,000 - $123,200
Net Income = $76,800

Retained Earnings, December 31, 2016 = Retained Earnings, January 1, 2016 + Net Income – Dividend
Retained Earnings, December 31, 2016 = $115,720 + $76,800 - $30,000
Retained Earnings, December 31, 2016 = $162,520

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