Problem -
Gerdes Psychological Services, Inc., closes its temporary accounts once each year on December 31. The company recently issued the following income statement as part of its annual report:
GERDES PSYCHOLOGICAL SERVICES, INC.
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2015
Revenue:
Counseling revenue $225,000
Expenses:
Advertising expense $1,800
Salaries expense 94,000
Office supplies expense 1,200
Utilities expense 850
Malpractice insurance expense 6.000
Office rent expense 24,000
Continuing education expense 2,650
Depreciation expense: fixtures 4,500
Miscellaneous expense 6,000
Income taxes expense 29,400 170,400
Net income $54,600
The firm's statement of retained earnings indicates that a $6,000 cash dividend was declared and paid during 2015.
a. Prepare the necessary closing entries on December 31, 2015.
b. If the firm's Retained Earnings account had a $ 92,000 balance on January 1, 2015, at what amount should Retained Earnings be reported in the firm's balance sheet dated December 31, 2015?