At September 1, 2017, Baxter Inc. Reported Retained Earnings Of $423,000. During The Month, Baxter Generated Revenues Of $60,000, Incurred Expenses Of $36,000, Purchased Equipment For $15,000 And Paid Dividends Of $6,000. What Is The Balance In Retained Earnings At September 30, 2017? | The Double-Entry System Requires That Each Transaction Must Be Recorded
1. The correct option of this multiple choice question is D as proved below: Here We Are Given: Retained Earnings at September 1, 2017 (Beginning Retained Earnings) = $423,000 Revenues = $60,000 Expenses = $36,000 Equipment = $36,000 (Here the value of equipment is irrelevant as it is not required in the calculation of RE at September 30, 2017) Dividends = $6,000 We Need To Find Out: Retained Earnings at September 30, 2017 (Ending Retained Earnings) = ? As, we know the formula for the calculation of Ending RE that is shown below: Retained Earnings at September 30, 2017 = Retained Earnings at September 1, 2017 + Net Income - Dividends As, we know the Net Income’s Formula which is shown below: Net Income = Revenues - Expenses = $60,000 - $36,000 = $24,000 By putting the values in ending retained earnings formula, we have: RE at September 30, 2017 = $423,000 + $24,000 - $6,000 = $441,000 2. The correct option of this multiple choice question (mcq) is A, ...