Magic Cleaning Inc showed the following account balances bef

Magic Cleaning, Inc. showed the following account balances before the closing process: Retained earnings $ 5,900 Service revenue 7,450 Interest revenue 700 Salaries expense 4,300 Operating expense 1,250 Interest expense 400 Dividends 1,000 The balance in the retained earnings account after the closing process should be:

$7,100.

None of these are correct.

$9,100.

$8,100.

$5,900.

Solution

Calculate ending balance of retained earnings ;

So answer is a) $7100

Note : Net income = 7450+700-4300-1250-400 = 2200