Reference no: EM132652292
Question - Gerdes Psychological Services, Inc. closes its temporary accounts once each year on December 31. The company issued the following income statement as part of its annual report.
GERDES PSYCHOLOGICAL SERVICES, INC. Income Statement For the year ended December 31,2017
Revenue:
Counseling revenue Cr:$225,000
Expenses:
Advertising expense Dr:$1800
Salaries expense Dr:94000
Office supplies expense Dr:1200
Utilities expense Dr:850
Office rent expense Dr:24000
Malpractice insurance expense Dr:6000
Continuing education expense Dr:2650
Depreciation expense: fixtures Dr:4500
Miscellaneous expense Dr:6000
Income tax expense Dr:29400 Cr:170,400
Net income Cr:$ 54,600
The firm's statement of retained earnings indicates that a $6000 cash dividend was declared and paid during 2017.
1. Prepare the necessary adjusting entries on December 31, 2017
2. If the firm's Retained earning had a $92,000 balance on January 1, 2017, at what amount should retained earnings be reported in the firm's balance sheet dated December 31, 2017?
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