Finding the balance in retained earnings


Problem 1: Provide a journal entries for the following and explained step by step of the accounts that's affected by the transactions -

Jan.1 Stockholder invest $40,000 in cash in starting a real estate office operating as a corporation.

Jan. 15 Real estate commissions billed to clients amount to $4,000.

Problem 2: If total liabilities decreased by $75,000 and stockholders' equity increased by $15,000 during a period of time, then total assets must change by what amount and direction during that same period?

a. $60,000 decrease

b. $60,000 increase

c. $75,000 increase

d. $90,000 increase

Problem 3: As of January 1, 20XXX, Grandma M's Homemade Ice Cream Shop had a balance and its retained earning account of $20,000. During the year Grandma M's had revenue of $100,000 and expenses of $105,000. In addition the business paid cash dividends of $2,000. What is the balance in Retained Earnings at December 31, 20XX for Grandma M's Homemade Ice Cream Shop?

a. $23,000

b. $13,000

c. $17,000

d. $27,000

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Accounting Basics: Finding the balance in retained earnings
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