Ferraro Consulting provides risk management services to individuals and to coorporate clients.The company closes its temporary accounts once each year on December 31. The Company recently issued the following income statement as part of its annual report
Ferraro Consulting
income statement
For the year Ended December 31,2007
Revenue
Consulting Revenue-individual client.............................................. $ 40,000
Consulting Revenue-individual client.............................................. 160,000
= $ 200,000
Expenses
Advertising Expense..............................................$ 16,000
Depriciation expense :computers..............................$ 24,000
Rent Expense......................................................$ 9,600
Office supplies expense......................................... $ 4,400
Travel Expense....................................................$ 57,800
Utilities Expense..................................................$ 3,300
Telephone & Internet Expense.................................$ 1,900
Salaries Expense..................................................$155,500
Interest Expense................................................. $ 2,500 275,000
$(75,000)
The firm's statement of retained earnings indicates that a $25,000 cash dividend was declaared and paid in 2007
(a) Prepare the necessary closing entries on December 31,2007
(b) If the firm's Retained Earnigs account had a $300,000 balance on jan 1,2007, at what amount should Retained Earnings be reported in the firm's balance sheet dated december 31st,2007?