The following information is available from the adjusted trial balance of the Harris Vacation Rental Agency. After closing entries are posted, what will be the balance in the Retained earnings account?
a) Total revenues $ 125,000
b) Total expenses 60,000
c) Retained earnings 80,000
d) Dividends 15,000

Retained Earnings Account will show a balance of $130000

Explanation:

Retained Earnings Balance is Calculated as Follows

                                                                        $

Opening Retained Earnings                       80000

Add Profit for the year (125000-60000)   65000

Less Dividends                                           (15000)

Retained Earnings at End of year              130000

$130,000

Explanation:

We must first determine the year's profit:

total revenues     $125,000

- total expenses  ($60,000)

net income           $65,000

you need to close net income:

Dr Net income 65,000

    Cr Retained earnings 65,000

you also need to close dividends account:

Dr Retained earnings 15,000

    Cr Dividends expense 15,000

the balance for retained earnings account:

debit                         credit

                                 80,000

                                 65,000

15,000                                  

                                130,000

answer; read and consider the content of the items;