Question

Assume that Sallisaw Sideboards, Inc. had a retained earnings balance of $10,000 on April 1, and that the company had the following transactions during April. Issued common stock for cash, $5,000. Provided services to customers on account, $2,000. Provided services to customers in exchange for cash, $900. Purchased equipment and paid cash, $4,300. Paid April rent, $800. Paid employees' salaries for April, $700. What was Sallisaw's retained earnings balance at the end of April?

$12,100.
$16,400.
$11,400.
Some other amount.

Answer 1

Answer:

$11,400

Explanation:

The Sallisaw shall determined the retained earnings as the end of the April using the following mentioned formula:

Retained earnings at the end of April=Retained earnings at the start of April+net income for the month of April-dividend paid during the April

In the given question

Retained earnings at the start of April=$10,000

Net income for the month of April=Provided services to customers on account+Provided services to customers in exchange for cash-Rent paid for April-salaries paid to employees for the month of April

Net income for the month of April=$2,000+$900-$800-$700

                                                        =$1,400

Dividend paid during april=$0

So based on the above calculations:

Retained earnings at the end of April=$10,000+$1,400=$11,400

So the answer is $11,400