Reference no: EM132647019
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 $225,000
Expenses:
Advertising expense $ 1800
Salaries expense 94000
Office supplies expense 1200
Utilities expense 850
Office rent expense 24000
Malpractice insurance 6000 expense
Continuing education expense 2650
Depreciation expense: 4500 fixtures
Miscellaneous expense 6000
Income tax expense 29400 170,400
Net income $ 54,600
The firm's statement of retained earnings indicates that a $6000 cash dividend was declared and paid during 2017.
Question a. Prepare the necessary adjusting entries on December 31, 2017
Question b. 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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