Consider the following account starting balances and transactions involving these accounts. Use T-accounts to record the...

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Consider the following account starting balances and transactions involving these accounts. Use T-accounts to record the...

Consider the following account starting balances and transactions involving these accounts.
Use T-accounts to record the starting balances and the offsetting entries for the transactions.

The starting balance of Cash is $14,100
The starting balance of Inventory is $4,900
The starting balance of Retained Earnings is $24,300

1. Sell, deliver, and receive payment of $20 for service
2. Consume good or service and pay expense of $3
3. Sell product for $25 in cash with historical cost of $20

What is the final amount in Retained Earnings?

business accounting

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Answer 1

Answer #1

Service revenue = $20 -->refer 1

Sales revenue = $25 --->refer 3

Total revenue = $20 + $25 = $45

Cost of services = $3 -->refer 2

Cost of sales = $20 -->refer 3

Total expenses = $3 + $25 = $23

Net income = Revenue - Expenses = $45 - $23 = $22

Final amount in Retained Earnings = Beginning amount + Net income = $24,300 + $22 = $24,322

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Answer 2

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